Capital Structure, Enterprise Risk Management, and Firm Value: The Moderating Role of Firm Growth in Cyclical and Non-Cyclical Sectors on the Indonesia Stock Exchange

Sukriyah Sukriyah; Etty Murwaningsari

doi:10.59261/inkubis.v8i4.501

Authors

Sukriyah Universitas Trisakti
Etty Murwaningsari Universitas Trisakti

DOI:

https://doi.org/10.59261/inkubis.v8i4.501

Keywords:

Capital Structure, Enterprise Risk Management Disclosure, Firm Growth, Firm Value

Abstract

Background: Firm value reflects investors’ assessments of corporate performance and prospects, yet evidence regarding the associations of capital structure and enterprise risk management (ERM) disclosure with firm value remains mixed.

Objective: This study examines the associations of capital structure and ERM disclosure with firm value and tests whether firm growth moderates these relationships among Indonesian non-financial firms.

Methods: An explanatory quantitative design was applied to 484 firm-year observations from 242 non-financial companies listed on the Indonesia Stock Exchange during 2023–2024. Firms were selected through purposive sampling. Firm value was measured using Tobin’s Q, capital structure using the debt-to-equity ratio, ERM disclosure using a 25-indicator COSO-based index, and firm growth using annual sales growth. The hypotheses were tested through pooled panel regression with moderated regression analysis.

Results: Capital structure was negatively associated with firm value (β = −0.188, p = 0.004), whereas ERM disclosure was positively associated with firm value (β = 1.721, p < 0.001). Firm growth did not significantly moderate the capital structure–firm value association (β = −0.004, p = 0.296). However, firm growth strengthened the positive association between ERM disclosure and firm value (β = 0.030, p = 0.031) and functioned as a quasi-moderator.

Conclusion: The findings indicate that lower leverage and more comprehensive ERM disclosure are associated with higher firm value, while firm growth strengthens only the value relevance of ERM disclosure within the observed sample and period.

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