Determinants of Capital Structure with Firm Size as Moderator

Abstract

This research examines the impact of profitability, asset structure, and liquidity on capital structure, as well as the moderating role of firm size. This study employs a causal quantitative approach using secondary data obtained from annual financial reports of food and beverage companies listed on the Indonesia Stock Exchange in 2021–2025. The sample consists of 62 companies, generating a total of 310 panel data observations. Multiple linear regression was used to test the hypotheses, while Moderated Regression Analysis (MRA) was used to examine the moderating effect. The results show that simultaneously, profitability, asset structure, and liquidity significantly impact capital structure. Partially, profitability and liquidity have a negative and significant effect on capital structure, while asset structure has a positive and significant effect. Furthermore, no moderating role of company size was found in the relationship between profitability and asset structure on capital structure, but significantly moderates the effect of liquidity on capital structure. These findings imply that firms need to optimize the use of internal funds by increasing profitability, managing asset structure effectively to support access to external financing, and maintaining liquidity levels in determining a sound capital structure. Furthermore, firm size needs consideration developing funding strategies because it strengthens the influence of liquidity on capital structure. This study contributes to the development of capital structure literature by shedding light on the moderating role of firm size in the association between liquidity and capital structure.