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

Teguh Erawati, Hadri Kusuma, Johan Arifin and Dewi Kusuma Wardani

Economic Studies journal, 2025, issue 3, 95-111

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.

JEL-codes: B26 P34 (search for similar items in EconPapers)
Date: 2025
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