The Effect of Leverage, Liquidity, Firm Size, Activity, and ESG Score on The Financial Performance Of Property and Real Estate Companies Listed on The Indonesia Stock Exchange (IDX) for The 2022-2023 Period
Abstract
This study aims to analyze the influence of leverage, liquidity, firm size, activity, and Environmental, Social, and Governance (ESG) scores on the financial performance of property and real estate companies listed on the Indonesia Stock Exchange (IDX) during the 2022-2023 period. Financial performance is measured using Return on Assets (ROA) with a one-year lag (t+1) to capture the delayed impact of managerial decisions. Utilizing a quantitative approach with purposive sampling, the study analyzed 58 companies, totaling 116 observations. Data analysis was performed using panel data regression with the Fixed Effect Model (FEM). The results indicate that only liquidity (Current Ratio) has a significant negative effect on financial performance, suggesting that excessive current assets lead to idle funds that diminish efficiency. Conversely, leverage, firm size, activity, and ESG scores do not significantly impact financial performance individually. However, all variables simultaneously affect performance. These findings underscore the necessity for efficient liquid asset management to maintain profitability amidst macroeconomic volatility.
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