www.sciedupress.com/afr Accounting and Finance Research Vol. 5, No. 2; 2016 Published by Sciedu Press 149 ISSN 1927-5986 E-ISSN 1927-5994 Influence of Profitability to the Firm Value of Diversified Companies in the Philippines William Sucuahi 1 & Jay Mark Cambarihan 1 1 University of Mindanao, Philippines Correspondence: William Sucuahi, University of Mindanao, Philippines Received: March 10, 2016 Accepted: March 28, 2016 Online Published: May 16, 2016 doi:10.5430/afr.v5n2p149 URL: http://dx.doi.org/10.5430/afr.v5n2p149 Abstract The main objective of every company is to maximize the assets or firm value. Maximizing firm value is essential for a company because it means increasing the wealth of shareholders as well. This study aims to determine if there is significant influence between the company’s profile such as industry, company age and its profitability with the firm value using Tobin’s Q model. The proponents selected 86 diversified companies in the Philippines by gathering and analyzing annual financial reports on 2014 in the Philippine Stock Exchange (PSE) to obtain the objective of the study and also employed predictive correlational design. Frequency, Mean and Multiple Regression were used to determine the significant influence between the independent and dependent variables. The multiple regression reveals that of the three factors assumed to influence value of the firm using the Tobin’s Q, only profitability shows significant positive impact on the firm’s value. Keywords: Financial Management, Firm Value, Diversification, Philippines, Tobin’s Q 1. Introduction Diversification and firm value remained relevant to most researchers for the past decades. This is because diversified company considers as a significant player in an emerging market (Kim, Hoskisson, Tihanya and Hong, 2004). Most of the study determines what factors can affect the firm value. It was stated that firm’s wealt h, technology, organization structure, human resources with discounted future cash flows (Kayali, Yereli and Ada, 2007) and environmental factors of industrial establishments (Konar, Bailly and Cohen, 2001) can affect firm value. Another study uses customer satisfaction, management understanding, technology usage, and product quality as factors that influence firm value (Düzer, 2008; and Akgüç, 1998). There are also many studies that have identified firms’ competitiveness as a factor that can affect firm value (Amiri Aghdaie et al., 2012; Ansari and Riasi, 2016; Riasi, 2015a; Riasi and Pourmiri, 2015). Additionally, there are various studies that focused on sustainable growth (Riasi and Amiri Aghdaie, 2013; Riasi and Pourmiri, 2016) and firm’s financing in order to determine the factors that affect firm value (Riasi, 2015b). However, most of the study used all types of firms to determine the factors of firm value. This study will focus on the firm value of diversified firms. There is a quick improvement when it comes to buy and sell financial instruments or simply what they call capital markets (Yildiz, 2006). This may be due to efficiency and credibility in the said capital markets, which is eventually brought about by the precise determination of the firm value. Güleryüz (2009) said that a firm value was the acquisition and the trade value of the company anticipated by volunteer buyers and sellers with thorough information about the company free from any problem. Modigliani and Miller (1958) pointed out that firm value was determined by firm’s asset earning power. The positive impact of asset earnings power indicated that a greater profit and efficient asset turnover if the company had higher firm’s earnings power. Thus, the firm value would probably increase. Aside from the asset and profit, the company debt policy also influences firm value. The higher the debt, the higher would be its stock price. Huang, Shih, Huang and Liu (2006) asserted promoting firms’ real economic value is an important objective. Because of these, different studies were conducted to determine the factors affecting the corporate firm value. For example, Gherghina (2014) studied the relationship between corporate governance and firm value. In addition, marketers are now shifting to search on the effect of marketing on the firm value (O'Sullivan & McCallig, 2012). This is an indicator that study on firm value is relevant in all aspects of business. This is the reason why different measurements of firm value were used. Such as Earning Capitalization Model, Market Value Added, Economic