Macroeconomic and financial dimensions influences on Indonesia's property and real estate companies value (2017-2022)

This paper investigates the relationship between macroeconomic factors, firm financial position, and firm value in Indonesia's property and real estate sector from 2017 to 2022. The property and real estate sectors significantly influence Indonesia's economic growth. Nevertheless, the real estate sector has encountered significant obstacles in recent years, notably during the COVID-19 pandemic, due to volatility in interest rates, high construction costs, and the sluggish property market. This study aims to address the existing research gap by investigating the relationship between macroeconomic indicators, including GDP growth, inflation rates, and interest rates, as well as financial factors, such as profitability and leverage, on the industry’s firm value over a specified timeframe. Using panel data regressions, the study analyzes 162 observations from 27 listed property and real estate companies. The empirical findings demonstrate that property and real estate firms have the potential to enhance their overall performance and increase shareholder value by considering the interconnectedness of economic conditions and the financial position of the firm. Profitability emerges as a significant predictor of firm value, while the selected macroeconomic factors have significant and insignificant effects on the valuation of firms. Meanwhile, since this industry has substantial leverage, this variable does not affect firm value. This study also highlights that the critical component that drives the evaluation of a firm's value is heavily influenced by the specifics of the industry and the regulatory framework in which the business operates.


Introduction
Indonesia's property and real estate sectors play a significant role in economic growth, contributing substantially to the nation's prosperity.These industries contributed IDR 468.22 trillion (USD 29.85 trillion) to the economy in 2021 (BPS, 2022).However, after the COVID-19 pandemic, the industry had to deal with problems like rising building costs, trouble getting licenses, and changes in interest rates.Deghi et al. (2022) found that worldwide market volatility from 2020 to 2022 affected the property and real estate sectors, which are vulnerable to economic situations.The Indonesian Central Agency on Statistics (BPS) reports that since 2017, the country's real estate market has been increasing steadily because of the country's growing urbanization, rising economy, and support from the government.However, the COVID-19 epidemic substantially influenced the nation and its real estate market, driving Indonesia's Central Bank (BI) to introduce incentives to address the situation.However, the housing sector in the Indonesian real estate market continues to see sluggish growth.nature of the economic environment.According to Kulkarni and Pimplapure (2022), macroeconomic factors are comprehensive indicators that influence an economy's financial expansion or contraction.These variables, which are also known as macroeconomic factors, are the situations that affect a nation's financial future.The Gross Domestic Product (GDP), interest rate, inflation, national income, fiscal policy, and employment are some of these variables.One crucial factor that might impact firm value is economic expansion.This study identifies three major factors-inflation, interest rates, and GDP growth rates-that consistently affect real estate performance in Indonesia.(Please see Table 1) Source: BPS, 2022 This study explores the relationship between macroeconomic factors and firm financial position on the value of Indonesian property and real estate firms from 2017 to 2022.The research objective below addressed to examines the relationship between macroeconomic factors and a firm financial position on the value of the company. i.
To investigate correlation between macroeconomic indicators such as GDP growth, inflation rate, and interest rate with the firm value of Indonesia property and real estate companies from 2017 to 2022 ii.
To assess which macroeconomic indicator strongly influences on firm value of Indonesian property and real estate companies.iii.
To investigate the relationship between firm financial position and firm value of the Indonesian property and real estate industry from 2017 to 2022.iv.
To examine the impact of profitability on firm value of the Indonesian property and real estate sector.v.
To examine the impact of leverage on the firm value of the Indonesian property and real estate sector.
The study used a dialectical approach to investigate how these macroeconomic factors and the firm's financial performance affected their overall value throughout the period.First, the literature review begins with firm value, key macroeconomic variables that impact firm value, and the effect of firm financial position on firm value.Second, research methodologies are presented.The study employed quantitative research methodologies utilizing statistical analysis.Thirdly, data analysis is presented and discussed.Finally, the conclusion, limitations, and future research recommendations of the outcomes are presented.

Literature Review
According to Lonkani (2018), the definition of firm value corresponds to evaluating a company's worth, which is determined by multiple aspects, including its assets, profits, and future expectations.This concept is crucial because it directly affects shareholders' wealth.One method of calculating a company's worth is Tobin's Q ratio.Chung and Pruitt's (1994) approximation is the most wellknown variation of Tobin's Q, which alters the original ratio from replacement costs to total assets.If the value of the ratio is more than one indicates that the market believes the company is worth more than its assets, while a value of less than one indicates that the market thinks the company is worth less than its assets (Sauaia and Castro, 2002).Variaiya et al. (1987) state that businesses and shareholder can enhance the quality of their investment and strategic decision-making by understanding the determinants that impact firm value.
Numerous existing literatures explore the relationship between macroeconomic factors and a firm financial position, with firm value showing varied and inconclusive results.Darrat and Glascock (1989), McNamara and Duncan (1995), Jubaedah et al. (2016), Duja andSuproyanto (2019), andOlalere et al. (2021) suggested a link between macroeconomic conditions and company financial health.At the same time, Sauaia and Castro (2002), Sultan (2014), Sucuahi andCambarihan (2016), andBudianto andBustaman (2016) also suggest there is a connection between financial position and company value.Sauaia and Castro (2002) found that high-performing organizations have a higher Tobin's Q ratio, which suggests that the market rewards the company's performance.Another research by Liow (2010) found that successful property and real estate enterprises have big asset sizes and market prices above their tangible asset book value, indicating that companies' market values depend on growth and performance.
Given the industry's uniqueness, this study aims to fill this gap by comprehensively analyzing macroeconomic factors and the company's financial position on the firm value.

Key Macroeconomic Factor on Firm Value
This research highlights three key variables that consistently impact real estate performance: a GDP growth rates, interest rates, and inflation.According to Romus et al. (2020), GDP growth is the annual change in the GDP level.GDP growth is a critical indicator of economic development and indicates the country's output (Romus et al., 2020).The increase in GDP is expected to increase consumers' purchasing power as their demand for the company's products increases.As a result, it will increase the company's revenue, making this a favourable indicator (Zulkarnain and Nawi, 2022).The impact of GDP growth on firm value has been the subject of numerous research, all of which have yielded varying conclusions.Several studies have shown the impact of GDP on the firm value and have generated varying conclusions.Budianto and Bustaman (2016) argued that the firm size and GDP growth rate significantly impact company value.At the same time, a study by Kanwal and Nadeem (2013) found that higher GDP is linked with better company performance, especially the return on assets (ROA).A study by Zulkarnain and Nawi (2023) also showed that GDP strongly correlates with house price increases.However, Olalere et al. (2021) argued that the GDP rate had an insignificant impact on firm value.Furthermore, Faradila and Effendi (2022) also suggested that GDP does not affect company value in banking and food and beverage companies.
Interest rates affect firms and households; hence, it extensively studied as economic indicators (Mishkin, 2019).Bernanke and Blinder (1992) discovered that interest rates affected companies' cash flows, asset prices, rental prices, and profitability.It also affects property investment decisions and returns, boosting stock prices and business value (Triani and Tarmidi, 2019).The neoclassical investment theory implies that when interest rates rise, corporations pay more to borrow money, which may reduce investment spending and profits and affect the firm's stock price and value.However, Chetty (2007) observed that low-interest rates could boost enterprises' investment strategies, whereas high asset values affect investor sentiment.In addition, Capozza and Li (2001) and Peng and Thibodeau (2019) interest rates can positively affect real estate business investment decisions when growth rates are strong or interest rates are persistently low.If low-interest rates have persisted for a while, it was found that every rate decrease has less impact on stimulating investments.Akimov et al. (2020) observed that monetary policy-driven interest rates influenced European public real estate markets from 1995 to 2003.On the other hand, Ling and Naranjo (1997), Egbunike and Okerekeoti (2018) and Romus et al. (2020) show that interest rates in Nigeria and Indonesia did not significantly impact the company's performance.
Inflation is characterised as a persistent and continuous rise in the cost of goods and services over a prolonged duration (Mishkin, 2019).Soukhakian and Khodakarami (2019) discovered that the negative influence of inflation could harm consumers' purchasing power.This could impact the firm's credit policies and the time it takes to collect accounts receivable.At the same time, Chen and Boness (1975) and Ling and Naranjo (1997) found that uncertainty due to inflation can impact a firm's investment decisions, which in turn can damage the firm's value because the real estate returns are exposed to consumption risk and unexpected inflation.Egbunike and Okerekeoti (2018) also showed that the inflation rate significantly influenced firm performance in Nigeria.Similarly, Keat et al. (2017) also found that the inflation rate is significantly related to the stock market performance in Thailand.In contrast, Karakus and Bozkurt (2017) discovered that the inflation rate has a negative impact on stock returns.However, Semenova and Vitkova (2019) discovered that the construction industry in Czech and Spain was not significantly affected.Kulkarni and Pimplapure (2022) discovered that the inflation rate did not impact the chosen public sector and banks' profitability.

Profitability on Firm Value
The correlation between profits and a company's worth has been the subject of several studies.According to Sucuahi and Cambarihan (2016), a company's Tobin's Q ratio analysis can reveal how profitability affects firm value in the Philippines.According to a study by Bartram et al. (2011), firm value increases with growth and profitability because more robust cash flows to shareholders boost the company's value.However, value decreases with age and size because larger companies are more likely to be well-established and have fewer significant new profit opportunities.Simultaneously, Liow (2010) discovered that real estate firms' substantial, profitable growth contributes significantly to increased stock market valuation.Thus, profitable enterprises have greater stock values.
A study by Varaiya et al. (1987) also discovered that companies actively pursue profitable growth strategies to generate value for their shareholders.As a result, profitability substantially impacts the value of a company, and investors are inclined to invest in profitable organizations due to their higher likelihood of generating future cash flows.The findings of these studies have implications for businesses and investors.Companies should enhance their profitability, increasing their value to investors.Investors should consider profitability as a factor in their investment decisions since companies with better profitability are more inclined to produce future cash flows (Varaiya et al., 1987).

Leverage on Firm Value
The impact of capital structure on business value has long been studied.When the debt tax shield effect is addressed, the Modigliani-Miller theorem (MM) shows a positive link between business value and leverage (Masulis, 1983).When using debt financing, a firm can deduct loan interest from its taxable income.Thus, corporations with more debt may have a cheaper cost of capital, increasing their valuation.Masulis (1983) states that a company's stock value rises with its debt.However, according to Simerly and Li (2000), leverage can either enhance or hinder performance, depending on whether a company operates in a stable or tumultuous environment.
Several studies have found contrasting findings about the influence of capital structure on business value.Some studies have found that capital structure has a positive impact on firm value, while others have found that it has a negative impact.For instance, Farooq and Masood (2016) found that leverage has a favourable and significant effect on business performance, increasing business value.This statement proves the trade-off argument that an increased debt ratio enhances shareholders' value.Further evidence of the impact of leverage on company value is provided by Budianto and Bustaman (2016) in their study on Indonesia's mining sector and Zamri et al. (2022) in their research on Malaysia's property sector.Panda et al. (2023) discovered similar results, indicating that the capital structure has a significant and favourable impact on the value of enterprises in the lower percentile.This effect is more pronounced in smaller companies with lower capitalization than older and well-established ones.On the contrary, Giang (2020) found in a study of Vietnam's plastics and packaging industries that capital structure has a conflicting influence on a company's value and can be varied across company percentiles.Furthermore, Indomo and Lubis (2023) discovered that the correlation between a company's leverage and the stage of the business cycle can differ.

Conceptual Background
The existing literature that explores the relationship between macroeconomic factors and a firm financial position with firm value generates conclusions that are both varied and inconclusive.Given the uniqueness of the industry, this study aims to fill this gap by conducting a comprehensive analysis of macroeconomic factors, company profitability, and capital structure and their effect on firm value.Figure 1 shows the research conceptual model based on the research objective that has lied out previously.

Research and Methodology
This study adopts a positivist philosophy with a deductive approach that uses secondary data to understand the relationship between company value, financial performance, and external factors.The correlation and relationship of the dependent and independent variables are used to test hypotheses.This study employed the panel data approach, a distinctive methodology that utilizes a combination of cross-sectional and time-series data.Econometric tests were used to identify the optimal model for the data; however, since this study employed a panel data approach, the generalized least squares (GLS) or random effects model is intended to be used.This study selected 27 listed Indonesian property and real estate companies for analysis using purposive sampling, shown in Table 2 (Saunders et al., 2018).The analysis includes 162 observations from 27 companies over six years, from 2017 to 2022.The company's data was derived from Bloomberg and the company's annual reports.The data will then be analyzed using STATA.

Firm Value
Macroeconomic Factors : Numerous previous studies use panel data regression analysis to investigate correlations between variables (Budianto and Bustaman, 2016;Egbunike and Okerekeoti, 2018;Olalere et al., 2021;Romus et al., 2020).The utilization of models is believed to offer a more comparable and consistent estimation for the parameter models.In this context, the empirical model would involve formulating equations that describe how the macroeconomic factors the firm financial position (measured by profitability and leverage), related to firm value.The coefficient in the baseline model represents the statistical portions of the dependent variable's variation that can be explained by the independent variables (Saunders et al., 2018).Therefore, the illustration of the baseline model is as follows: Following are the estimation equations that can be derived to estimate (model 1): ′   , =  0 +  1  , +  2  , +  3  , +  4  , +  5  , +  6  , + Where the firm value (FV) is measured using Tobin's Q, which is a function of macroeconomic variables to understand volatility impact on the firm value measured by the economic growth rate (GDP), interest rate (INT), inflation rate (INF), and firm financial position such as ROA and ROE to measure profitability, and LEV indicates company's leverage and ε is the model's error term.The relationship of the variable will be analysed with panel data regression using STATA, including the F-statistic and T-statistic tests.F-statistic is to understand the impact of the independent variable simultaneously.The coefficients of each independent variable will be evaluated using the T-statistic, which will show the strength and direction of the relationship between the independent variables and the dependent variable.(Choe and Retherford, 1993;Olalere et al, 2021).This study also uses two strategies to verify regression result robustness.Firstly, the residual must be normal, multicollinearity must not arise, and heteroscedasticity must not be present (Osborne and Waters, 2002).Secondly, the control variable is incorporated into the model.This reduces the impact of other factors on company characteristics since the control variable quantifies the independent variables' effect on the dependent variable (Panda et al., 2023).Firm size has been found to be a variable that influences firm value in previous research (Simerly and Li, 2000;Egbunike and Okerekeoti, 2018;Natsir and Yusbardini, 2019).This led to the following equations (model 2): ′   , =  0 +  1  , +  2  , +  3  , +  4  , +  5  , +  6  , +  7  , +  Table 3 defines the dependent and independent variables used in this study.This study measures firm value (FV) using Tobin's Q (market-to-book ratio) of the company, which is the book value of the total asset plus market value equity minus book value equity divided by the balance sheet's book value of the total asset (Chung and Pruitt, 1994).For the macroeconomic factor, the research will employ Indonesia GDP data published by Badan Pusat Statistik (BPS) from 2017 to 2022.Simultaneously, both interest rate and annual inflation rate data are published by Bank Indonesia (BI).Interest rate data is measured by the BI 7-Day Reverse Repo Rate, which refers to the policy rate that banks pay when they borrow and deposit money from and to the BI for seven days.For the firm financial position, the company's profitability will be evaluated by accounting performance using Return on Asset (ROA) and Return on Equity (ROE) (Egbunike and Okerekeoti, 2018;Romus et al., 2020).At the same time, the Debt-to-Equity Ratio (DER) measures the company's leverage level.The company's size act as a control variable will be measured by the natural logarithm of the companies' total assets (Simerly and Li, 2000;Egbunike and Okerekeoti, 2018;Natsir and Yusbardini, 2019).

Findings and Discussions
This section thoroughly analyses and discusses the empirical findings obtained from the panel data regression model, presenting an analytical explanation of the outcomes.F-test and T-test are used to investigate the relationship between the dependent and independent variables simultaneously and in parts.

Descriptive Statistics
The descriptive statistics result is shown in Table 4.This study's dependent variable FV, or Tobin's Q, averaged 0.4503 with a standard deviation of 1.67709.This means property and real estate company values differ.The average company value (Q ratio) is less than one, indicating that market valuations are lower than the company's assets and may suggest undervalued or underperforming assets.The research period showed an average GDP growth rate of approximately 3.7%, an average inflation rate of 2.93%, and an average interest rate of 4.41%.While a standard deviation for GDP, interest rate and inflation are 2,65%, 0.8% and 0,9% suggesting noticeable fluctuations in economic growth.At the same time, the company's profitability was reflected by ROA and ROE, which averaged 1.89 and 3.338.This implies that the industry company earns 1.89% per dollar of assets and 3.338% each dollar of shareholders' equity.The standard deviations of 6.7% for ROA and 12.3% for ROE show that profitability measurements vary widely.The industry appears to use high levels of leverage, as evidenced by the average corporate debt-to-equity ratio of 45.294 and standard deviation of 37.717.The standard deviation also reveals a broad range of debt-to-equity ratio values.Some companies may exhibit significant indebtedness, whereas others maintain lower or nonexistent debt levels.Finally, the company size presented a mean of IDR 8.96 million and a standard deviation of IDR 1.526 million.The moderate standard deviation suggests that while there is diversity in company sizes, it is not overly fragmented.

Panel Data Model
The test-based panel regression method was selected by conducting the Chow, Hausman, and Lagrange Multiplier (LM) tests to determine the optimum panel data regression approach.These three tests show that the random effect regression model (REM) is best for this study's regression model.The generalised least square (GLS) random effect regression was used to estimate the unknown parameters, useful when panel data residuals are correlated.Furthermore, semi-log transformation is used on the dependent variable to get the test results.This attempt reduces data variability to improve the regression model (Osborne & Waters, 2002).Table 5 shows the empirical findings of the random effects regression model for the panel data.Model 1 shows the original empirical model, and Model 2 shows the robustness test result.First, the R-squared value shows that the six independent variables explain 21,0% of the determinant factor affecting Tobin's Q.Therefore, it can be concluded that the variables proposed in this study cannot fully explain all determinants that affect firm value.Even so, independent variables still present their impacts on the firms in this correspondence to F-test and T-test results.The F-statistic tests the overall significance of the regression model.With F and a p-value of 0.000 (0.000 < 0.050), the model is statistically significant, which indicates that the independent variable collectively significantly impacts the dependent variable (i.e., Firm Value).
Each independent variable's impact is also examined by conducting the t-test.If the sig (p-value) is less than 0.05 for each independent variable, it significantly impacts the dependent variable (refer to table column sig in table 3).According to model 1, firm profitability, ROA, and ROE significantly affect company value.ROA increases business value, while ROE decreases it.This shows that assuming all independent variables are unchanged, every 1% improvement in ROA will boost Firm Value by 13.7%, and every 1% improvement in ROE will decrease it by 5.4%.At the same time, macroeconomic variables like GDP growth, BI interest rate, and inflation have both positive and negative insignificant effects on business value.The table shows that every 1% GDP growth and inflation diminishes firm value by 2.7% and 0.8%, respectively.BI interest rates rose 11,3%.At the same time, company leverage (debt of equity ratio) does not significantly impact firm value and suggests that every increase in the company's leverage will decrease firm value by 0,2% respectively.

Validity and Reliability Test
For model robustness, residual data must be normal, no multicollinearity and heteroscedasticity must not occur (Osborne and Waters, 2019)-several tests were conducted to ensure the normality, no multicollinearity and no heteroscedasticity.Saphiro-Wilk test shown, the asymp sig.(2-tailed) > 0.05 indicates that the residuals of the model are regularly distributed.Second, the Breush-Pagan / Cook-Weisberg test also shows the asymp sig.(2-tailed) > 0.05; hence, the model lacks heteroscedasticity because the result is more significant than 0.05.Next, a multicollinearity test was carried out by assessing each independent variable and determining the amount of closeness in their correlations using the Variance Inflation Factor (VIF).It is found that the VIF number for each independent variable is less than 10, so the assumption can be met, which means that there is no strong correlation between the independent variables (no multicollinearity).This can be ruled out except for ROA, considering that the data source for the two ROA and ROE variables is the same: net income.This attempt reduces data variability to improve the regression model (Osborne & Waters, 2002).
Furthermore, to evaluate model robustness, a control variable is used in addition to the assumption test (refer to model 2's result in Table 5).Company size acts as the variable control tested on the entire sample to ensure the results are consistent with previous findings.Like the first model, ROA increases firm value, whereas ROE decreases it.Assuming all independent variables are constant, a 1% ROA improvement increases Firm Value by 14.6%.Firm Value decreases by 5.7% for every 1% increase in ROE.Similar to interest rates, a 1% increase in BI interest rate increases firm value by 11.2 %.Company size also negatively affects firm value, with a 1% decrease increasing firm value by 15%.GDP growth and inflation have insignificant negative effects.Table shows that GDP growth decreases inflation by 12.6% and 1.1% for every 1% rise.Every increase in the company's leverage decreases Firm Value by 0.2%.Additionally, table 5 shows that adding company size to the regression model increases R-squared from 21% to 27%.The F test indicates a significant relationship between the independent and dependent variables (Firm Value) for model 2, which align with the first model (p-value = 0.000).

Hypothesis Result
This section examines the relationships between macroeconomic conditions, firm financial position, and Indonesian property and real estate's firm value from 2017 to 2022 to reach a thorough conclusion.Table 6 shows the summarized result of hypothesis testing.According to the results, GPD growth and inflation had a negative, non-significant influence, whereas interest rates had a substantial positive effect.At the same time, profitability, leverage, and firm size had a varied impact on solid value.ROA and ROE had mixed results on firm value.While leverage and the size of the company was found to have a negative correlation with firm value with varied effect.The result shows that the GDP growth has negative insignificant effect on firm value (-0.027; p > 0.05).The finding reflects Olalere et al. (2021) and Faradilla and Effendi's (2023) study that GDP growth did not affect firm value.Hence, the increase in Indonesia's GDP has no impact on the valuations of property and real estate firms.This shows that Indonesian property and real estate industries are resilient to economic growth shifts.BIS (2012) claimed that property is both a consumption good and an investment; therefore, rising prices may diminish consumption but enhance investment demand due to anticipation of further price increases.As a result, these companies continue to be in demand regardless of economic conditions.Similarly, the result shows inflation rates insignificant negatively affect business value (-0.008; p > 0.05).These findings supported the study of Karakus and Bozkurt (2017), Semenova and Vitkova (2019), and Kulkarni and Pimplapure (2022), which demonstrated a statistically insignificant link between inflation and company performance that could affect firm value.Since inflation had a low standard deviation, the regulatory environment in Indonesia during the study period may have compensated for the negative consequences of the inflation rate.Thus, while inflation is an important macroeconomic indicator, it may not immediately affect the firm's real estate asset value.
The BI interest rate found to be significant and positively (0.113; p-value > 0.05), influence on firm The BI interest rate was found to be significant and positive (0.113; p-value > 0.05), influencing firm value.This finding follows Capozza and Li (2001) and Akimov et al. (2020), who found that interest rates and country monetary policy significantly affected property real estate companies.This result is contrary to Egbunike and Okerekeoti (2018), Romus et al. (2020), andLing andNaranjo (1997), who found an insignificant relationship between returns and interest rates.This result may be attributed to firm investment decisions and the regulatory environment during the period studied (Capozza and Li, 2001).According to Chetty (2007), the demand for investment rises when interest rates rise in an environment with low-interest rates while asset values are high.Secondly, the government rolled out accommodative fiscal and monetary policies to boost property purchases.Implementing VAT exemption in 2020 and BI's macroprudential policy of relaxing the loan-to-value (LTV) ratio enables the property sector in challenging times (Indrawati et al., 2022).In 2021, the Central Bank of Indonesia (BI) reported that this lenient policy had increased property sector loan disbursements by 9.7% over 2020 (Indrawati et al., 2022).This policy lasts till 2022 and may promote first-time buyers and speculative purchases, which could benefit the company operation and eventually its value.
The regression shows ROA and ROE had mixed results on firm value.ROA shows to have a significant positive correlation between ROA and company valuation (0.137; p-value < 0.05).The firm's worth increases with its return on assets.This supports the current study that increased profitability and growth increase company value (Bartram et al., 2011;Sucuahi and Cambarihan, 2016).Due to its high ROA, the corporation efficiently leverages its properties and investments to make profits despite considerable debt.Efficiency helps service debt and maintain financial stability.In comparison, ROE regression results indicate a significant negative correlation between ROE and company valuation (-0.057; p-value < 0.05).This contradicts the fourth hypothesis that ROA increases business value.This analysis rejects hypothesis 5 since ROE and company value are strongly negatively correlated.This contradicts Bartram et al. (2011), who find that profitability and expansion boost stockholder cash flows and business value.The conclusion showed a high-debt business, like the property and real estate industry.At the same time, a company with a high ROE may be profitable if it has considerable debt and spends a lot of its interest profits.This may diminish dividends and retained earnings.Since it accounts for debt, ROE is a better investor profitability ratio (Badeskis et al., 2020).Furthermore, leverage shows an insignificant negative leverage coefficient (-0.002; p > 0.05).This study supports Simerly and Li (2000) and Giang's (2020) study that observed that leverage has a counterintuitive impact on firm value because debt ratios increase volatility and financial risk, contrary to the present study that finds high leverage could significantly impact its financial performance and overall value.(Budianto and Bustaman, 2016;Zamri et al, 2022;Farooq and Masood, 2016;Panda et al, 2023).Since the Indonesian property company boosted its debt ratio from 2017 to 2022 to sustain liquidity during deceleration, especially during the pandemic, investors may view the firm's excessive leverage as an indication of financial risk, decreasing its valuation.This result also supported Indomo and Lubis's (2023) study that found leverage hurts business performance during the decline phases of the business cycle.The emphasis on heightening the company's risk exposure is also supported by the result that shows size negatively impacts firm value (-0.155; p-value > 0.05).Larger companies may be more affected by economic downturns, and companies with extensive assets may struggle to quickly convert them into cash flow, which could impair their dividends (Niresh and Velnampy, 2014).

Conclusions
This study investigates the joint impact of macroeconomic conditions and firm financial position on the valuation of Indonesian property and real estate firms.It aims to fill existing knowledge gaps and provide valuable insights for professionals in the industry.The findings emphasize the significance of considering internal and external factors when operating the organization, showing that macroeconomic factors and the firm's financial position significantly affect the company value simultaneously.Even though GDP and inflation had little statistical relevance on a company's value, understanding the association is crucial to comprehending potential nuances within the study period.The data also show a distinct and significant link between interest rates and company value, that the sector's accommodative regulatory structure may considerably affect interest rates and company value during the study period, resulting in a mixed effect of macroeconomic factors on firm value.In addition, duration may also affect the result.A study conducted by Duja and Supriyanto (2019) revealed that while macroeconomic factors may have a limited immediate effect on the real estate market, they can potentially exert an impact in the long run.It also shows how this sector's regulatory framework affects market behaviour and investor sentiment, indirectly affecting corporate value.As a result, stakeholders in this industry should bear in mind the impact of macroeconomic conditions and the company's financial health on business value.
At the same time, a firm's financial position also has a mixed effect on the value of property and real estate businesses.The study found profitability significantly affects firm value compared to leverage.It reveals that high debt ratios increase financial risk exposure and market volatility in this sector.This result may also be affected by the business cycle during the period of the study (Simerly and Li, 2000;Indomo and Lubis, 2023;Giang, 2020).ROA is found to increase company value, suggesting that organizations efficiently employ their properties and investments to generate profits.In contrast, the analysis reveals that the return on equity (ROE) has a statistically significant negative impact, which implies that despite a company having a high ROE by having considerable debt, shareholders may not receive the advantages.These findings support MM's theory that capital structure choices affect stakeholder wealth allocation, including shareholders.The implications for operational efficiency and stakeholder wealth distribution make it crucial for organizations to manage profitability and leverage.This research fills literature gaps and stimulates additional study of how industry attributes, regulatory environment, and its dynamics affect company value, supporting sector-specific research that can help organizations make informed decisions.The company's management and directors must evaluate internal and external issues when managing and navigating growth strategies to increase company value.Managers in this industry can benefit from the insights of this research by focusing on optimizing their firm's performance, as the firm value is most affected by internal factors (Varaiya et al.,1987).It also highlights the significance of Return on Asset (ROA) in fostering company value.It suggests that managers should increase the value of their company by improving their operations, products, or services, regardless of the stage of the enterprise.However, a manager also needs to be cautious in considering their debt level as high leverage impacts investors' perception of the sector's financial risk.Therefore, the research implies that knowing industry features and the business cycle is crucial for a manager to increase the firm's value.Furthermore, this study can also aid regulators in creating a more effective initiative and policy by understanding both elements, which could help stimulate growth in the property and real estate industries.Conducting regular evaluations and adjustments to regulatory policies can ensure that the sector remains adaptive to the evolving economic landscape.
There are several limitations to this study.The initial limitation concerns the sample selection, limited to real estate and property data from 2017 to 2022.Hence, the findings may not apply to businesses operating in different sectors or periods.The second limitation is that secondary data may contain biases and omissions that affect the accuracy of regression findings.The third limitation of this study is the determinant factor of firm value from macro and microeconomic perspectives, which is limited to specific macroeconomic variables and firm financial position attributes.This limitation is evident in the regression results, which exhibit a low coefficient determination value.Future studies can add better predictor variables, such as corporate governance and another variable that may influence firm value.Thus, there is plenty of opportunity for further research in this area.

Table 2 :
List Indonesia's Property and Real Estate Companies

Table 3 :
Definitions of Firm Value Determinants Variables

Table 5 :
Result of the Model