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The Effect of Leverage and Sales Growth on the Financial Distress with Company Size as a Moderating Variable

Author

Listed:
  • Teguh Erawati
  • Hadri Kusuma
  • Johan Arifin
  • Dewi Kusuma Wardani

Abstract

The study of financial distress plays an important role in helping investors to determine investments in healthy and unhealthy companies and also as material for company management control in predicting financial distress. Financial distress is also influenced by several factors, including sales growth, level of leverage and company size. This study aims to empirically test leverage and sales growth on Financial Distress with company size as a Moderating Variable. The research method used in this study is quantitative methods using Moderated Regression Analysis (MRA) supported by the IBM SPSS 20 statistical tool. This research uses a sample of 55 manufacturing companies on the Indonesia Stock Exchange for 2016-2019 with 220 observations. The sampling technique was carried out using the purposive sampling method. The research results show that leverage has a negative effect on financial distress, sales growth has no effect on financial distress, company size is able to moderate the effect of leverage on financial distress, and company size is not able to moderate the effect of sales growth on financial distress. Hopefully, this research can contribute to the development of science in the field of financial distress and moderation analysis.

Suggested Citation

  • Teguh Erawati & Hadri Kusuma & Johan Arifin & Dewi Kusuma Wardani, 2025. "The Effect of Leverage and Sales Growth on the Financial Distress with Company Size as a Moderating Variable," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 95-111.
    • Handle: RePEc:bas:econst:y:2025:i:3:p:95-111
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    File URL: http://archive.econ-studies.iki.bas.bg/2025/2025_03/2025_03_06.pdf
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    References listed on IDEAS

    as
    1. Richard Arhinful & Mehrshad Radmehr, 2023. "The Impact of Financial Leverage on the Financial Performance of the Firms Listed on the Tokyo Stock Exchange," SAGE Open, , vol. 13(4), pages 21582440231, November.
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    More about this item

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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