Financial Indicators and Governance Mechanisms on Profitability of IDX-Listed Insurers: The Moderating Role of Firm Size
Keywords: Profitability (ROA), Liquidity (Current Ratio), Risk-based capital (RBC), Board compensation, Growth opportunities, Firm size, Insurance
Abstract
Purpose – This study aims to examine the influence of capital adequacy, liquidity, board compensation, and growth opportunities on the profitability of insurance firms listed on the Indonesia Stock Exchange (IDX).
Methodology – Quantitative causal approach using secondary data from the annual financial statements of insurance companies listed on the IDX from 2019 to 2022 was used in this research. The population includes 18 insurance firms, from which 10 of those firms were selected through purposive sampling, producing 40 observations. Multiple regression and moderated regression analysis (MRA) through EViews 12 to evaluate both direct and moderating effects.
Findings –Liquidity exerts a significant negative effect on profitability, while capital adequacy, board compensation. It revealed that company size significantly moderated the relationship between liquidity and profitability, but it did not moderate the effects of the other financial indicators.
Originality – This research contributes to the literature by integrating multiple financial indicators and governance related variables in a comprehensive profitability model, emphasizing the moderating role of firm size in insurance industry context of Indonesia.
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References
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