This study investigates the strategic role of capital structure and dividend policy in shaping firm value, with corporate profitability positioned as a mediating mechanism and firm size incorporated as a moderating factor. Capital structure and dividend policy represent two fundamental financial decisions that influence not only firms’ internal performance but also external market perceptions. While prior studies have extensively examined their direct effects on firm value, limited attention has been given to the performance-based channels through which these financial policies operate. Addressing this gap, this study adopts a moderated mediation framework to provide a more comprehensive explanation of firm value creation.

Using panel data from non-financial companies listed on the Indonesia Stock Exchange over the period 2015–2024, the study employs panel regression, bootstrapped mediation analysis, and moderated mediation testing. The empirical findings indicate that capital structure has a significant negative effect on corporate profitability and firm value, whereas dividend policy exerts a positive and significant influence on both outcomes. Corporate profitability is found to significantly mediate the relationships between capital structure, dividend policy, and firm value, confirming its role as a key transmission mechanism. Furthermore, firm size moderates these relationships, suggesting that the effectiveness of financial policy decisions varies across firms.

Overall, the results highlight that firm value is shaped through both direct financial policy effects and indirect performance-based pathways. The study contributes to corporate finance literature by integrating capital structure, dividend policy, and profitability into a unified analytical framework and offers practical implications for managers in designing financial strategies that support sustainable value creation.