Determinants of Financial Performance: The Moderating Role of Institutional Ownership in Construction Firms Listed on the Indonesia Stock Exchange
DOI:
https://doi.org/10.5555/ijosmas.v6i6.562Keywords:
Keywords: ESG, Leverage, Enterprise Risk Management, Firm Size, Institutional Ownership, Financial Performance.Abstract
This study examines the influence of Environmental, Social, and Governance (ESG) factors, leverage (DER), Enterprise Risk Management (ERM), and firm size on financial performance (ROA) among construction companies listed on the Indonesia Stock Exchange (BEI) from 2021 to 2024, with institutional ownership as the moderating variable. The research population comprised 29 BEI-listed construction firms in 2024, from which 10 companies were selected as samples via purposive sampling, yielding 40 observations (panel data for 2021–2024). A quantitative approach was employed using panel data regression and moderated regression analysis (MRA). The results indicate that DER exerts a negative and significant effect on ROA, whereas ESG, ERM, and firm size show no significant influence on ROA. Institutional ownership moderates the effects of ERM and firm size on ROA but does not moderate the relationships between ESG or DER and ROA. These findings underscore the importance of effective capital structure management, alongside the implementation of risk management practices and business scale enhancement under institutional investor oversight, to foster sustainable financial performance in the construction sector.
Downloads
References
Adi, A., & Suwarti, T. (2022). Firm size, leverage, and profitability: Evidence from high-risk industries. Jurnal Keuangan dan Bisnis, 14(2), 115–128.
Agustin, H., Mulyani, E., & Fitri, Y. (2013). Analisis kinerja keuangan perusahaan. Jurnal Akuntansi dan Keuangan, 5(1), 45–58.
Alvionita, R., Nugroho, B., & Prasetyo, A. (2021). Institutional ownership and firm performance. Jurnal Manajemen dan Kewirausahaan, 23(3), 201–214.
Anandamaya, P., & Hermanto, S. B. (2021). Firm size and financial performance in construction firms. Jurnal Ilmu dan Riset Manajemen, 10(4), 1–15.
Aziz, A. (2024). ESG disclosure and firm performance in emerging markets. Journal of Sustainable Finance, 6(1), 55–70.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Basuki, A. T., & Yuliadi, I. (2015). Ekonometrika: Teori dan aplikasi. Yogyakarta: Mitra Pustaka.
Bathala, C. T., Moon, K. P., & Rao, R. P. (1994). Managerial ownership, debt policy, and the impact of institutional holdings. Journal of Financial Management, 23(3), 38–50.
Baxter, N. D. (1967). Leverage, risk of ruin, and the cost of capital. Journal of Finance, 22(3), 395–403.
Bello, Z. Y., & Ghandour, A. (2019). Firm size and profitability: Evidence from project-based industries. International Journal of Economics and Finance, 11(6), 84–95.
BPS. (2021). Statistik konstruksi Indonesia. Jakarta: Badan Pusat Statistik.
Carranza, J. E., Daude, C., & Melguizo, A. (2003). Capital-intensive industries and financial performance. OECD Working Paper.
Claessens, S., & Yafeh, Y. (2012). Institutional ownership and corporate governance. Journal of Financial Economics, 104(1), 1–27.
COSO. (2004). Enterprise risk management—Integrated framework. New York: Committee of Sponsoring Organizations.
COSO. (2017). Enterprise risk management—Integrating with strategy and performance. New York: COSO.
Darsono, & Azhari, M. (2005). Manajemen keuangan. Yogyakarta: Andi.
Devie, D., Liman, L. P., & Tarigan, J. (2020). Firm size and financial performance. Jurnal Akuntansi dan Keuangan, 22(2), 73–86.
Du, J., Li, W., & Wang, Y. (2016). Institutional ownership and firm performance. Emerging Markets Finance and Trade, 52(6), 1430–1445.
Esterhuyse, L., Wingard, C., & Muller, C. (2023). Stakeholder theory and financial performance. Sustainability Accounting Journal, 15(1), 22–39.
Fajriah, Y., & Ghozali, I. (2022). ERM implementation and earnings volatility. Jurnal Akuntansi Multiparadigma, 13(1), 88–102.
Faller, C. M., & Knyphausen-Aufseß, D. (2018). Does equity ownership matter? Journal of Business Economics, 88(2), 155–187.
Farihadhy, M., & Anis, I. (2024). Institutional investors and ESG effectiveness. Jurnal Akuntansi dan Keberlanjutan, 4(1), 1–14.
Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance. European Accounting Review, 26(1), 1–28.
Florio, C., & Leoni, G. (2020). ERM and decision quality. Journal of Risk Finance, 21(5), 489–507.
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman.
Gerged, A. M., Cowton, C. J., & Beddewela, E. (2022). Institutional ownership and governance effectiveness. Corporate Governance: An International Review, 30(1), 23–41.
Holly, A., Smith, J., & Turner, R. (2023). Institutional pressure and ERM maturity. Journal of Risk Management, 14(2), 101–118.
Hutchinson, M., Seamer, M., & Chapple, L. (2015). Institutional investors and governance. Accounting & Finance, 55(2), 423–447.
Irma, A. (2019). Ownership structure and firm performance. Jurnal Akuntansi dan Auditing Indonesia, 23(1), 1–15.
Jensen, M. C. (1986). Agency costs of free cash flow. American Economic Review, 76(2), 323–329.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm. Journal of Financial Economics, 3(4), 305–360.
Jorfi, H., Nor, K. M., & Najafi, A. (2021). ERM practices and firm performance. International Journal of Productivity and Performance Management, 70(2), 281–300.
Kasmir. (2021). Analisis laporan keuangan. Jakarta: RajaGrafindo Persada.
Khan, M., Serafeim, G., & Yoon, A. (2016). Corporate sustainability and financial performance. The Accounting Review, 91(6), 1697–1724.
Khan, M., et al. (2020). Stakeholder theory revisited. Journal of Business Ethics, 162(2), 217–233.
Kraus, A., & Litzenberger, R. H. (1973). A state-preference model of optimal leverage. Journal of Finance, 28(4), 911–922.
Kurniawan, D. (2022). Leverage and profitability. Jurnal Manajemen Keuangan, 9(1), 45–58.
Lee, S. P., & Isa, M. (2023). ESG disclosure, institutional ownership, and performance. Journal of Sustainable Finance & Investment, 13(2), 345–360.
Lestari, P., Nugraha, R., & Putra, A. (2023). ERM and profitability in construction firms. Jurnal Manajemen Risiko, 7(2), 77–91.
Liang, H., Renneboog, L., & Tobin, D. (2022). ESG as strategic resources. Journal of Corporate Finance, 74, 102215.
McShane, M. K., Nair, A., & Rustambekov, E. (2011). ERM and firm value. Journal of Accounting, Auditing & Finance, 26(4), 641–658.
Mutaz, M., Al-Hiyari, A., & Al-Samman, H. (2021). ESG and firm performance. Journal of Accounting and Business Research, 11(3), 201–219.
Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147–175.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions. Journal of Financial Economics, 13(2), 187–221.
Natalia, D., Putri, A., & Wijaya, H. (2023). Financial performance measurement. Jurnal Akuntansi Kontemporer, 5(2), 89–102.
Nel, G. F., Smit, E. V. D. M., & Ward, M. J. (2024). Institutional ownership and firm outcomes. Emerging Markets Review, 58, 100943.
Nugroho, A., & Prabowo, T. (2021). Leverage and cash flow risk. Jurnal Keuangan dan Perbankan, 25(3), 431–445.
Oktaviyana, A., Prasetyo, B., & Hidayat, R. (2023). Capital structure, firm size, and profitability. Jurnal Akuntansi dan Keuangan Indonesia, 20(1), 1–17.
Pagach, D., & Warr, R. (2010). ERM and firm performance. Journal of Risk and Insurance, 77(1), 185–211.
Putri, S. A. (2024). Leverage policy and firm performance. Jurnal Manajemen Keuangan, 11(1), 33–47.
Rohmah, S., & Imron, A. (2023). Leverage, firm size, and profitability. Jurnal Ekonomi dan Bisnis, 26(2), 140–155.
Rustam, A., & Ardiansyah, M. (2021). Institutional ownership and firm value. Jurnal Akuntansi dan Investasi, 22(2), 241–256.
Sekaran, U., & Bougie, R. (2016). Research methods for business (7th ed.). Chichester: Wiley.
Sial, M. S., et al. (2022). Environmental performance and cost of capital. Journal of Cleaner Production, 334, 130234.
Sihombing, G. (2018). Analisis laporan keuangan. Jakarta: RajaGrafindo Persada.
Stiroh, K. J., & Rumble, A. (2006). The dark side of diversification. Journal of Banking & Finance, 30(8), 2131–2161.
Wang, X. (2025). Ownership structure and performance. Asia-Pacific Journal of Accounting & Economics, 32(1), 1–20.
Whelan, T., & Fink, C. (2020). The comprehensive business case for ESG. Harvard Business Review.
Wulandari, S. (2022). ERM and profitability. Jurnal Akuntansi dan Manajemen, 16(3), 201–214.
Yang, Y., Chen, Y., & Li, J. (2021). Firm size and economies of scale. Journal of Business Research, 128, 1–10.
