The Moderating Role of Firm Size in the Relationship Between Sustainability Reporting, Liquidity, and Financial Performance: Evidence from Indonesian Regional Development Banks
Keywords:
Sustainability Report, Liquidity,Firm Size, Financial Performance, Moderated Regression Analysis (MRA)
Abstract
The financial performance of Regional Development Banks (BPD) is influenced by internal and external factors that reflect their commitment to sustainability and asset management stability. This study aims to analyze the effect of Sustainability Reports and liquidity on financial performance, with firm size as a moderating variable. A quantitative approach was used, with panel data regression and Moderated Regression Analysis (MRA) methods, implemented in EViews, on the 15 largest asset BPDs in Indonesia during the 2022–2024 period. The results show that Sustainability Reports have a positive and significant effect on financial performance, while liquidity has no significant effect. In addition, firm size is proven to moderate the relationship between Sustainability Reports and financial performance with a negative effect, but does not moderate the relationship between liquidity and financial performance. These findings underscore the importance of optimizing sustainability reporting strategies and resource management within regional development banks to support sustainable financial performance.
References
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Sama’ila, I., Lawal, A. B., & Abdulkadir, J. (2024). Moderating Role Of Firm Size On The Relationship Between Liquidity Management And Profitability Of Listed Consumer Goods Companies In Nigeria. African Banking and Finance Review Journal, 15(15), 120–138.
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Wati, P. S., Mulyadi, J. M. V, & Rachbini, W. (2019). Determinants of Financial Performance with Size as a Moderator. Ecodemica Journal: Journal of Economics, Management and Business, 3(2), 257–268.
Aristanto, E. (2019). People's Business Credit (KUR): An Affirmative Policy Option to Encourage the Development of Micro, Small and Medium Enterprises in Indonesia. Journal of Banking and Finance, 1(1), 10–23.
Beck, T., Demirg¨uç, A., Demirg¨uç -Kunt, D., & Maksimovic, V. (2005). Financial and Legal Constraints to Growth: Does Firm Size Matter? In THE JOURNAL OF FINANCE •: Vol. LX (Issue 1).
Bilal, Z., AlGhazali, A., & Samour, A. (2024). GCC banks liquidity and financial performance: does the type of financial system matter? Future Business Journal, 10(1), 57.
Bosi, M. K., Lajuni, N., Wellfren, A. C., & Lim, T. S. (2022). Sustainability reporting through environmental, social, and governance: A bibliometric review. Sustainability, 14(19), 12071.
Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management. Cengage Learning.
Creswell, J. W. (2023). Research Design: Qualitative, Quantitative and Mixed Methods Approaches. In SAGE Publications, Inc.: Vol. Sixth Edition (6th ed., Issue 1). SAGE Publications, Inc.
Czarnitzki, D., & Hottenrott, H. (2011). R&D investment and financing constraints of small and medium-sized firms. Small Business Economics, 36, 65–83.
Farhan, N. H. S., Almaqtari, F. A., Hazaea, S. A., & Al-ahdal, W. M. (2023). The moderating effect of liquidity on the relationship between sustainability and firms’ specifics: Empirical evidence from the Indian manufacturing sector. Heliyon, 9(4), e15439. https://doi.org/10.1016/j.heliyon.2023.e15439
Garcia, S., Cintra, Y., Torres, R. de C. S. R., & Lima, F. G. (2016). Corporate sustainability management: a proposed multi-criteria model to support balanced decision-making. Journal of Cleaner Production, 136, 181–196. https://doi.org/10.1016/j.jclepro.2016.01.110
Gitman, L. J., Juchau, R., & Flanagan, J. (2015). Principles of managerial finance. Pearson Higher Education AU.
Global Reporting Initiative. (2013). Sustainability Reporting Guidelines. Encyclopedia of Corporate Social Responsibility, 2389–2395. https://doi.org/https://doi.org/10.1007/978-3-642-28036-8_619
Global Reporting Initiative. (2025). GRI Standards. https://www.globalreporting.org/standards/
Hashmi, S. D., Gulzar, S., Ghafoor, Z., & Naz, I. (2020). Sensitivity of firm size measures to practices of corporate finance: evidence from BRICS. Future Business Journal, 6(1), 9.
López-Santamaría, M., Amaya, N., Hinestroza, M. P. G., & Cuero, Y. A. (2021). Sustainability disclosure practices as seen through the lens of the signaling theory: A study of companies listed on the Colombian Stock Exchange. Journal of Cleaner Production, 317, 128416.
Loughran, T., & McDonald, B. (2024). Measuring firm complexity. Journal of Financial and Quantitative Analysis, 59(6), 2487–2514.
Maybank Sekuritas Indonesia. (2025). What is Return on Equity (ROE)? https://www.maybanktrade.co.id/produk/kamus-investasi/return-on-equity-ratio/
Nam, N. H. P., & Tuyen, T. T. M. (2024). Impact of liquidity on capital structure and financial performance of non-financial-listed companies in the Vietnam stock market. Future Business Journal, 10(1), 126.
Ngumo, K. S., Collins, K. W., & David, S. H. (2020). Determinants of financial performance of microfinance banks in Kenya. ArXiv Preprint ArXiv:2010.12569.
Njenga, A. N., Mwangi, C. I., & Okiro, K. O. (2025). The Effect of Dividend Policy on the Relationship between Liquidity and Firm Value of Firms Listed at the Nairobi Securities Exchange. Journal of Finance and Accounting, 9(2), 48–61.
Ozili, P. K. (2023). The acceptable R-square in empirical modeling for social science research. In Social research methodology and publishing results: A guide to non-native English speakers (pp. 134–143). IGI global.
Penrose, E. T. (2009). The Theory of the Growth of the Firm. Oxford University Press.
Qofi’ah, R., & Lismawati, L. (2025). The Effect of Environmental Social Governance on the Company’s Financial Performance with Company Size as a Moderating Variable. Asian Journal of Management Analytics, 4(2), 447–460. https://doi.org/10.55927/ajma.v4i2.14122
Ross, S. A., Jaffe, J., & Kakani, R. K. (2019). Corporate Finance (10th ed.). McGraw-Hill Education.
Rudžionienė, K., & Brazdžius, Š. (2023). Cost and Benefits of Sustainability Reporting: Literature Review. Sustainable Performance in Business Organizations and Institutions: Measurement, Reporting and Management, 56–72.
Sabrina, H. L. (2019). The effect of sustainability reports on the financial performance of banking companies. Jurnal Paradigma Akuntansi, 1(2), 477–486.
Sama’ila, I., Lawal, A. B., & Abdulkadir, J. (2024). Moderating Role Of Firm Size On The Relationship Between Liquidity Management And Profitability Of Listed Consumer Goods Companies In Nigeria. African Banking and Finance Review Journal, 15(15), 120–138.
Santosa, P. W. (2020). The moderating role of firm size on financial characteristics and Islamic firm value at Indonesian equity market. Verslas: Teorija Ir Praktika, 21(1), 391–401.
Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill-Building Approach (7th ed., Vol. 34, Issue 7). John Wiley & Sons. https://doi.org/10.1108/lodj-06-2013-0079
Shawat, R. S., Zamel, A., Otake, Oshitsugu, Sabry, S., & Badawy, H. (2024). How Firm Size Shapes the ESG and Financial Performance Nexus: Insights from The MENA Region. Journal of Accounting and Auditing: Research & Practice, July, 1–15. https://doi.org/10.5171/2024.145355
Sudiyatno, B., & Suwarti, T. (2022). The Role of Liquidity in Determining Firm Performance: An Empirical Study on Manufacturing Companies in Indonesia. European Journal of Business and Management Research, 7(6), 183–188.
Sugiyono. (2013). Quantitative, Qualitative, and R&D Research Methods. Alfabeta.
Wati, P. S., Mulyadi, J. M. V, & Rachbini, W. (2019). Determinants of Financial Performance with Size as a Moderator. Ecodemica Journal: Journal of Economics, Management and Business, 3(2), 257–268.
Published
2025-12-03
How to Cite
Pamor Nugroho, Bulan Prabawani, & Andi Wijayanto. (2025). The Moderating Role of Firm Size in the Relationship Between Sustainability Reporting, Liquidity, and Financial Performance: Evidence from Indonesian Regional Development Banks. International Journal of Economics, Business and Innovation Research, 5(01), 41-59. https://doi.org/10.63922/ijebir.v5i01.2606
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