Profitability, Asset Tangibility, and Liquidity on Capital Structure: The Moderating Role of Sales Growth
DOI:
https://doi.org/10.33395/owner.v10i4.3530Keywords:
asset tangibilty, capital structure, liquidity, profitability, sales growth.Abstract
This study examines the influence of profitability, asset tangibility, and liquidity on capital structure in energy sector firms listed on the Indonesia Stock Exchange from 2020 to 2024, with sales growth functioning as a moderating variable. This research is motivated by inconsistent findings in previous studies regarding the determinants of capital structure and the limited discussion on the moderating role of sales growth, particularly in the Indonesian energy sector. The sample consists of 280 firm-year observations selected using purposive sampling based on data availability criteria. This study employs panel data regression analysis to test the proposed hypotheses. The results show that profitability and liquidity have a negative and significant effect on capital structure, suggesting that organisations with a higher level of financial performance and stronger liquidity tend to rely less on debt financing. Asset tangibility is also found to have a negative and significant effect, suggesting that tangible assets are not used as the main consideration in determining leverage. Furthermore, the moderating analysis reveals that sales growth does not significantly moderate the relationship between profitability and capital structure nor between asset tangibility and capital structure. However, sales growth strengthens the negative effect of liquidity on capital structure. These findings provide stronger support for the Pecking Order Theory, emphasizing the importance of internal financing, while providing limited support for the Trade-Off Theory. This investigation contributes to the existing tissue of literature by emphasising the conditional role of sales growth and providing empirical evidence from the energy sector.
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