The Role of Profitability in the Effect of Company Growth on the Debt Policy

Akhmadi Akhmadi, Dabela Yunia and Robiyanto Robiyanto

International Journal of Financial Research, 2020, vol. 11, issue 4, 267-274

Abstract: This study aims to examine the role of profitability as a mediating variable on the effect of company growth on debt policy. The samples were companies of textile and garment sub-sector listed on the Indonesia Stock Exchange in the 2014-2018 period. The results show that asset growth (AG) did not affect the debt to equity ratio (DER). In addition, return on asset (ROA) was found to have a positive effect on the DER. Meanwhile, the ROA could not mediate the effect of asset growth on the DER.

Keywords: asset growth; return on asset; debt to equity ratio; Indonesia Stock Exchange (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:11:y:2020:i:4:p:267-274

DOI: 10.5430/ijfr.v11n4p267

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