Growth sales, capital structure and corporate governance on financial performance of energy and basic material sector: Evidence from Indonesia
Vol 9, Issue 1, 2025
VIEWS - 833 (Abstract)
Abstract
This study aims to discover the relationship between growth sales, capital structure, and corporate governance on financial performance of energy and basic material sector public companies in Indonesia. Financial performance is observed from 2 aspects: market performance (Tobin’s Q) and profitability performance (ROA). The population in this study is firms in the energy and basic material sector on Indonesia Stock Exchange. The total population is 248 firms. 39 firms were selected as samples. The data is obtained from the annual report which starts from the period 2018 to 2022. A total of the population was determined as samples by purposive sampling method. Data analysis using panel data regression. The result shows: 1) Growth Sales have a significant influence on market performance; however, it does not have a significant effect on profitability performance. 2) Capital Structure significantly influences market and profitability performance 3) Corporate governance significantly influences market and profitability performance. Suggestions for companies that must strive to increase sales, maintain good corporate governance and pay attention to the company’s capital structure in a balanced manner.
Keywords
Full Text:
PDFReferences
- Abd El-Sayed, E. S., El-Sakhawy, M., & El-Sakhawy, M. A.-M. (2020). Non-wood fibers as raw material for pulp and paper industry. Nordic Pulp & Paper Research Journal, 35(2), 215–230. https://doi.org/10.1515/npprj-2019-0064
- ACHIM, M.-V., BORLEA, S.-N., & MARE, C. (2015). Corporate governance and business performance: evidence for the romanian economy. Journal of Business Economics and Management, 17(3), 458–474. https://doi.org/10.3846/16111699.2013.834841
- Adesina, J. B., Nwidobie, B. M., & Adesina, O. O. (2015). Capital structure and financial performance in Nigeria. International Journal of Business and Social Research, 5(2), 21-31. https://www.academia.edu/download/42966508/Jurnal_2.pdf
- Aguilera, R. V., & Crespi-Cladera, R. (2016). Global corporate governance: On the relevance of firms’ ownership structure. Journal of World Business, 51(1), 50–57. https://doi.org/10.1016/j.jwb.2015.10.003
- Apuke, O. D. (2017). Quantitative Research Methods : A Synopsis Approach. Kuwait Chapter of Arabian Journal of Business and Management Review, 6(11), 40–47. https://doi.org/10.12816/0040336
- Ararat, M., Black, B. S., & Yurtoglu, B. B. (2017). The effect of corporate governance on firm value and profitability: Time-series evidence from Turkey. Emerging Markets Review, 30, 113–132. https://doi.org/10.1016/j.ememar.2016.10.001
- Arora, A., & Sharma, C. (2016). Corporate governance and firm performance in developing countries: evidence from India. Corporate Governance, 16(2), 420–436. https://doi.org/10.1108/cg-01-2016-0018
- Astuti, E., Suhadak, Rahayu, S. M., & Wilopo. (2018). The influence of information technology strategy and management support to the internal business process, competitive advantage, financial and non-financial performance of the company. International Journal of Web Information Systems, 14(3), 317–333. https://doi.org/10.1108/ijwis-11-2017-0079
- Chechet, I. L., & Olayiwola, A. B. (2014). Capital structure and profitability of Nigerian quoted firms: The agency cost theory perspective.Available online: https://www.academia.edu/download/52083184/US_JOURNAL_2.pdf (accessed on 11 November 2023).
- Chen, L., Feldmann, A., & Tang, O. (2015). The relationship between disclosures of corporate social performance and financial performance: Evidences from GRI reports in manufacturing industry. International Journal of Production Economics, 170, 445–456. https://doi.org/10.1016/j.ijpe.2015.04.004
- Coad, A., Segarra, A., & Teruel, M. (2016). Innovation and firm growth: Does firm age play a role? Research Policy, 45(2), 387–400. https://doi.org/10.1016/j.respol.2015.10.015
- D. Banker, R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy? Management Decision, 52(5), 872–896. https://doi.org/10.1108/md-05-2013-0282
- Dai, L., Fu, R., Kang, J.-K., et al. (2016). Corporate governance and the profitability of insider trading. Journal of Corporate Finance, 40, 235–253. https://doi.org/10.1016/j.jcorpfin.2016.08.002
- Dang, C., & Li, Z. F. (2013). Measuring Firm Size in Empirical Corporate Finance. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2345506
- Dang, C., (Frank) Li, Z., & Yang, C. (2018). Measuring firm size in empirical corporate finance. Journal of Banking & Finance, 86, 159–176. https://doi.org/10.1016/j.jbankfin.2017.09.006
- Dawar, V. (2014). Agency theory, capital structure and firm performance: some Indian evidence. Managerial Finance, 40(12), 1190–1206. https://doi.org/10.1108/mf-10-2013-0275
- Detthamrong, U., Chancharat, N., & Vithessonthi, C. (2017). Corporate governance, capital structure and firm performance: Evidence from Thailand. Research in International Business and Finance, 42, 689–709. https://doi.org/10.1016/j.ribaf.2017.07.011
- Doğan, M. (2013). Does firm size affect the firm profitability? Evidence from Turkey. Available online: https://core.ac.uk/download/pdf/234629457.pdf (accessed on 11 November 2023).
- Doytch, N., & Narayan, S. (2016). Does FDI influence renewable energy consumption? An analysis of sectoral FDI impact on renewable and non-renewable industrial energy consumption. Energy Economics, 54, 291–301. https://doi.org/10.1016/j.eneco.2015.12.010
- El-Faitouri, R. (2014). Board of directors and Tobin’s Q: Evidence from UK firms. Journal of Finance and Accounting, 2(4), 82-99. https://doi.org/10.12691/jfa-2-4-2.
- Febriyanto, F. C. (2018). The effect of leverage, sales growth and liquidity to the firm value of real estate and property sector in indonesia stock exchange.Available online: https://doi.org/10.32493/eaj.v1i3.y2018.
- Hakimah, Y., Pratama, I., Fitri, H., Ganatri, M., & Sulbahrie, R. A. (2019). Impact of Intrinsic Corporate Governance on Financial Performance of Indonesian SMEs. International Journal of Innovation, Creativity and Change Vol, 7(1), 32-51.
- Husna, A., & Satria, I. (2019). Effects of return on asset, debt to asset ratio, current ratio, firm size, and dividend payout ratio on firm value. International Journal of Economics and Financial Issues, 9(5), 50–54. https://doi.org/10.32479/ijefi.8595
- Hussain, N., Rigoni, U., & Orij, R. P. (2016). Corporate Governance and Sustainability Performance: Analysis of Triple Bottom Line Performance. Journal of Business Ethics, 149(2), 411–432. https://doi.org/10.1007/s10551-016-3099-5
- Indonesia, B. E. (2022). IDX Yearly Statistics. Available online: https://www.idx.co.id/Media/2bpnqglq/idx_annually_2022.pdf (accessed on 11 November 2023).
- Isidro, H., & Sobral, M. (2014). The Effects of Women on Corporate Boards on Firm Value, Financial Performance, and Ethical and Social Compliance. Journal of Business Ethics, 132(1), 1–19. https://doi.org/10.1007/s10551-014-2302-9
- Jackson, D., & Turner, R. (2017). Power analysis for random‐effects meta‐analysis. Research Synthesis Methods, 8(3), 290–302. Portico. https://doi.org/10.1002/jrsm.1240
- Khan, M., Srinivasan, S., & Tan, L. (2016). Institutional Ownership and Corporate Tax Avoidance: New Evidence. The Accounting Review, 92(2), 101–122. https://doi.org/10.2308/accr-51529
- Mahirun, M., & Kushermanto, A. (2018). Capital structure, investment opportunity set, growth sales, firm size and firm value: r&d intensity as mediating. Available online: https://www.proquest.com/scholarly-journals/capital-structure-investment-opportunity-set/docview/2049668617/se-2 (accessed on 11 November 2023).
- Mardawiyah Daryanto, W., & Nurfadilah, D. (2018). Financial Performance Analysis Before and After the Decline in Oil Production: Case Study in Indonesian Oil and Gas Industry. International Journal of Engineering & Technology, 7(3.21), 10. https://doi.org/10.14419/ijet.v7i3.21.17085
- Munisi, G., & Randøy, T. (2013). Corporate governance and company performance across Sub-Saharan African countries. Journal of Economics and Business, 70, 92–110. https://doi.org/10.1016/j.jeconbus.2013.08.003
- Nimtrakoon, S. (2015). The relationship between intellectual capital, firms’ market value and financial performance. Journal of Intellectual Capital, 16(3), 587–618. https://doi.org/10.1108/jic-09-2014-0104
- Nirajini, A., & Priya, K. B. (2013). Impact of capital structure on financial performance of the listed trading companies in Sri Lanka. https://tarjomefa.com/wp-content/uploads/2017/12/236-English-TarjomeFa.pdf
- Niresh, J. A., & Velnampy, T. (2014). Firm Size and Profitability: A Study of Listed Manufacturing Firms ed Manufacturing Firms in Sri Lanka. International Journal of Business and Management, 9(4). https://doi.org/10.5539/ijbm.v9n4p57
- Purbawangsa, I. B. A., Solimun, S., Fernandes, A. A. R., et al. (2019). Corporate governance, corporate profitability toward corporate social responsibility disclosure and corporate value (comparative study in Indonesia, China and India stock exchange in 2013-2016). Social Responsibility Journal, 16(7), 983–999. https://doi.org/10.1108/srj-08-2017-0160
- Putri, I. G. A. P. T. (2020). Effect of capital structure and sales growth on firm value with profitability as mediation. International Research Journal of Management, IT and Social Sciences. https://doi.org/10.21744/irjmis.v7n1.833
- Rachmawati, R. (2021). Effect of sales growth, firm size, profitability on earning per share. Available online: https://www.turcomat.org/index.php/turkbilmat/article/view/2875 (accessed on 12 November 2023).
- Rahman, Md. J., & Yilun, L. (2021). Firm Size, Firm Age, and Firm Profitability: Evidence from China. Journal of Accounting, Business and Management (JABM), 28(1), 101. https://doi.org/10.31966/jabminternational.v28i1.829
- Rodriguez-Fernandez, M. (2016). Social responsibility and financial performance: The role of good corporate governance. BRQ Business Research Quarterly, 19(2), 137–151. https://doi.org/10.1016/j.brq.2015.08.001
- Rusdiyanto, R., Hidayat, W., Tjaraka, H., Septiarini, D. F., Fayanni, Y., Utari, W., Waras, W., Indrawati, M., Susanto, H., & Tjahjo, J. D. W. (2020). The Effect Of Earning Per Share, Debt To Equity Ratio And Return On Assets Onstock Prices: Case Study Indonesian. Available online: http://eprints.uwp.ac.id/id/eprint/2784/ (accessed on 23 November 2023).
- S, N. (2016). The Impact of Capital Structure on Financial Performance of the Firms: Evidence From Borsa Istanbul. Journal of Business & Financial Affairs, 5(2). https://doi.org/10.4172/2167-0234.1000173
- Sam, M., Fazli, M., & Hoshino, Y. (2013). Sales growth, profitability and performance: empirical study of Japanese ICT industries with three Asean Countries.Available online: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2250909 (accessed on 12 November 2023).
- Tailab, M. (2014). The effect of capital structure on profitability of energy American firms. Available online: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3251675 (accessed on 12 November 2023).
- Velte, P. (2023). Institutional ownership and board governance. A structured literature review on the heterogeneous monitoring role of institutional investors. Corporate Governance: The International Journal of Business in Society, 24(2), 225–263. https://doi.org/10.1108/cg-10-2022-0414
- Wahyudi, S. M. (2020). Effect of leverage, profitability, sales growth toward company values. Available online: https://www.ijmsssr.org/paper/IJMSSSR00209.pdf (accessed on 12 November 2023).
- Wahyuni, L., Fahada, R., & Atmaja, B. (2019). The Effect of Business Strategy, Leverage, Profitability and Sales Growth on Tax Avoidance. Indonesian Management and Accounting Research, 16(2), 66–80. https://doi.org/10.25105/imar.v16i2.4686
- Wieczorek-Kosmala, M., Błach, J., & Gorzeń-Mitka, I. (2021). Does Capital Structure Drive Profitability in the Energy Sector? Energies, 14(16), 4803. https://doi.org/10.3390/en14164803
- Zeitun, R., & Tian, G. G. (2014). Capital Structure and Corporate Performance: Evidence from Jordan. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2496174
DOI: https://doi.org/10.24294/jipd3923
Refbacks
- There are currently no refbacks.
Copyright (c) 2025 Fitri Yeni, Hamdy Hadi, Elfiswandi Elfiswandi
License URL: https://creativecommons.org/licenses/by/4.0/
This site is licensed under a Creative Commons Attribution 4.0 International License.