DETERMINANTS OF FINANCIAL PERFORMANCE: FINANCIAL FLEXIBILITY AND WORKING CAPITAL EFFICIENCY WITH GOOD CORPORATE GOVERNANCE (GCG) AS A MODERATING VARIABLE IN INFRASTRUCTURE COMPANIES (2020–2025)
DOI:
https://doi.org/10.24905/icobis.v2i1.84Keywords:
Cash Ratio, Working Capital Turnover, Return on Assets, Good Corporate Governance, Infrastructure, Panel Data.Abstract
This study aims to analyze and examine the effect of financial flexibility, proxied by the Cash Ratio, and working capital efficiency, proxied by Working Capital Turnover (WCT), on financial performance, proxied by Return on Assets (ROA), and to examine the role of Good Corporate Governance (GCG) as a moderating variable. The population comprises all infrastructure-sector companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2025 period. Using purposive sampling, a sample of 37 companies (222 observations) was obtained and analyzed using panel data regression with the Fixed Effect Model (FEM) approach and Moderated Regression Analysis (MRA) in Stata. The empirical results show that, partially, the Cash Ratio has no significant effect on ROA, whereas WCT has a significant negative effect on ROA owing to the phenomenon of working capital starvation. Furthermore, the moderation tests confirm that GCG is not proven to moderate the effect of the Cash Ratio on ROA. However, GCG is proven to significantly moderate the effect of WCT on ROA by strengthening its negative effect. This study concludes that tightening working capital efficiency and rigid corporate governance oversight, without considering the adequacy of net working capital buffers, can suppress asset profitability in infrastructure-sector companies.
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