Capital Structure Mediating Profitability and Firm Size Effects on Firm Value in Consumer Non-Cyclicals

Abstract

This research is driven by fluctuations observed in the performance of consumer non-cyclicals firms listed on the Indonesia Stock Exchange (IDX) between 2021 and 2025. It sets out to examine how profitability and firm size shape firm value, treating capital structure as a mediating mechanism. Profitability and firm size act as independent variables, firm value serves as the dependent variable, and capital structure functions as the intervening variable. A quantitative panel-data regression procedure was carried out with the aid of EViews 13. Through purposive sampling, 52 firms from the consumer non-cyclicals sector were retained based on criteria such as uninterrupted IDX listing throughout the study window, complete financial statements denominated in Indonesian Rupiah, and no reported losses. Estimation results show that profitability and capital structure each carry a significant positive influence on firm value, while firm size carries a significant negative influence. Both profitability and firm size, in turn, negatively affect capital structure. Mediation testing further establishes that capital structure meaningfully channels the effects of both profitability and firm size onto firm value. Practically, these results give corporate managers a reference point for shaping financing policy and give investors a basis for judging company performance ahead of an investment decision.