CAPITAL STRUCTURE, COMPANY SIZE, AND FINANCIAL PERFORMANCE: A STUDY OF ENERGY SECTOR ISSUERS ON THE IDX 2020–2024

Authors

  • Gundahara Fakultas Ekonomi, Universitas Gunung Leuser Aceh, Indonesia
  • Farma Andiansyah Fakultas Ekonomi, Universitas Gunung Leuser Aceh, Indonesia
  • Dicky Zulkarnaen Fakultas Ekonomi, Universitas Gunung Leuser Aceh, Indonesia

Keywords:

Capital Structure, Firm Size, Financial Performance, Indonesia Stock Exchange

Abstract

This study investigates the influence of capital structure and firm size on the financial performance of energy sector companies listed on the Indonesia Stock Exchange (IDX) during 2020–2024. Employing a quantitative causal–associative design, the research utilizes secondary data from audited annual reports, with purposive sampling applied to select firms that consistently disclosed complete financial information. Capital structure was measured using the Debt-to-Equity Ratio (DER), firm size was proxied by total assets, and financial performance was represented by Return on Equity (ROE). Data analysis was conducted using multiple linear regression, supported by classical assumption tests, coefficient of determination (R²), and significance testing (F-test and t-test). The results reveal that DER has a significant positive effect on ROE, supporting the Trade-Off Theory and Modigliani–Miller framework that highlight the role of optimal leverage in enhancing firm value. Firm size also exerts a significant positive effect on ROE, consistent with the Economies of Scale perspective, which suggests that larger firms benefit from resource efficiency, broader market access, and greater financial resilience. Furthermore, the joint effect of DER and firm size demonstrates a significant influence on financial performance, indicating that the strategic balance between capital structure and business scale strengthens competitiveness and profitability in the energy sector. These findings provide theoretical reinforcement and empirical evidence that both financial leverage and firm scale are critical determinants of sustainable corporate performance in capital-intensive industries policy.

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Published

2025-08-22

Issue

Vol. 1 No. 2 (2025): Asri International; Journal Of Economic, Business, And Management

Section

Articles

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Copyright (c) 2025 Gundahara, Farma Andiansyah, Dicky Zulkarnaen

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