Financial Performance: The Roles of Leverage, Firm Size, Market Value, and Corporate Governance in Consumer Cyclicals

Abstract

This study aims to analyze the effect of leverage, firm size, market value, and corporate governance mechanisms on the financial performance of consumer cyclicals sector companies listed on the Indonesia Stock Exchange during 2021–2024. Financial performance is proxied by Return on Assets (ROA), leverage by Debt to Asset Ratio (DAR), firm size by the logarithm of sales, market value by Earning per Share (EPS), and corporate governance by the number of board commissioners, board directors, and audit committee members. This study uses a quantitative approach with secondary data obtained from annual reports and financial statements. The sample was selected using purposive sampling, resulting in 43 companies and 172 observations. Data were analyzed using panel data regression with STATA 17. The results show that firm size, market value, and the audit committee have a positive effect on financial performance. Surprisingly, the board of directors has a negative effect, indicating that a larger board tends to raise coordination complexity and cost burdens that ultimately lower financial performance, whereas leverage and the board of commissioners have no significant effect. This study contributes to strengthening signaling theory and agency theory and provides practical implications for managers and investors in evaluating the determinants of financial performance in the consumer cyclicals sector.