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All Journal Journal of Business and Management Inaba Indonesian Journal of Innovation Multidisipliner Research
Wawan Ichwanudin
Sultan Ageng Tirtayasa University
Chemical Engineering, Chemistry & Bioengineering Civil Engineering, Building, Construction & Architecture Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Industrial & Manufacturing Engineering Social Sciences

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Profitability’s Effect on IDX30 Firm Value: The Role of Capital Structure and Firm Size Ahmad Dika Cavalera Putra Benteng; Wawan Ichwanudin; Emma Suryani
Indonesian Journal of Innovation Multidisipliner Research Vol. 2 No. 4 (2024): Oktober - Desember
Publisher : Institute of Advanced Knowledge and Science

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.69693/ijim.v2i4.212

Abstract

This study investigates the impact of profitability on firm value, with capital structure serving as a mediating variable and firm size as a moderating variable, focusing on companies listed on the Indonesia Stock Exchange's IDX30 index from 2018 to 2022. A quantitative approach is employed to examine the causal relationships, utilizing secondary data from the financial statements of each company, which were sourced from the firms' official websites or the IDX website. A non-probability sampling method was used to select the companies from the IDX30 index during the specified period. The analysis was conducted using panel data, with descriptive statistics and conditional process Hayes analysis performed through SPSS25 and the Hayes Process. The results reveal that profitability has a positive and significant effect on firm value, while also demonstrating a negative and significant impact on capital structure. Furthermore, capital structure positively influences firm value and mediates the relationship between profitability and firm value. Additionally, firm size moderates the effect of profitability on firm value and the impact of capital structure on firm value. These findings provide insights into the interconnected roles of profitability, capital structure, and firm size in determining firm value among IDX30 index listed companies.
Profitability Moderates The Effect Of Capital Structure On Financial Distress: A Trade-Off Perspective Seandy Ginanjar; Wawan Ichwanudin
Journal of Business and Management Inaba Vol. 5 No. 1 (2026): Volume 5 Number 1, June 2026
Publisher : Universitas Indonesia Membangun (Inaba)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.56956/aaw0hz56

Abstract

This study examines the moderating role of profitability in the relationship between capital structure and financial distress from the perspective of trade-off theory. The sample comprises firms consistently included in the LQ45 Index during 2021–2024, with observations structured as firm-year panel data. Capital structure is measured by the debt-to-equity ratio, profitability by return on assets, and financial distress by the Altman Z-Score. Hypotheses are tested using panel-data regression and Moderated Regression Analysis estimated through the Random Effects Model at a 5 percent significance level. The results show that the debt-to-equity ratio has a negative and significant effect on the Z-Score, indicating that higher leverage increases financial-distress risk. Return on assets does not exert a significant direct effect on the Z-Score. However, the interaction between leverage and profitability is positive and significant, demonstrating that profitability weakens the adverse effect of debt on financial condition. Firms with stronger profitability are therefore better able to absorb debt-related pressures, whereas highly leveraged firms with lower profitability remain more vulnerable to financial distress. These findings provide empirical support for the contingent trade-off between the benefits of debt financing and the potential costs of financial distress and extend evidence concerning capital structure decisions in emerging markets.
Co-Authors Ahmad Dika Cavalera Putra Benteng Emma Suryani Seandy Ginanjar