Can Leverage Enhance the Impact of Business Diversification on Firm Performance?

Abstract

The business world, technological advancements, and economic uncertainty drive companies to innovate to maintain operations and continuously improve firm performance. This study examines the influence of business diversification, company size, and leverage on firm performance, as well as the effect of business diversification on firm performance moderated by leverage, in manufacturing companies in the consumer goods sector listed on the Indonesia Stock Exchange (IDX) during the period 2018-2025. The population of this study consists of manufacturing companies in the consumer goods sector listed on the IDX from 2018 to 2025. The sampling technique used is purposive sampling, which involves selecting participants based on specific criteria. A total of 24 companies were sampled in this study. The data analysis technique employed is SmartPLS 3.0 software. The results indicate that business diversification and leverage have a positive and significant effect on financial performance; company size has a negative and significant effect on financial performance; and business diversification has a positive and significant effect on financial performance, moderated by leverage.