The Influence of Internal Control Systems, Capital Structure, Unemployment Rate and Inflation on the Economic Stability of Companies in the Basic Industry & Chemical Sector Listed on the Indonesia Stock Exchange for the 2022-2024 Period

Abstract

The Basic Industry and Chemical sector offers significant prospects driven by increasing demand and broad export opportunities. However, its economic stability faces challenges due to declining sales and profits, as well as rising production costs that are not commensurate with selling prices. These issues are influenced by internal factors such as internal control systems and capital structure, as well as external factors such as unemployment and inflation. This study examines these four factors simultaneously for the 2022–2024 period, as an update from previous studies that generally discussed them separately. The study population included 95 Basic Industry and Chemical companies listed on the Indonesia Stock Exchange during that period. Using a purposive sampling technique with the criterion of completeness of financial reports, 76 companies were selected, resulting in a total of 228 observational data sets over the three-year period. The results indicate that internal control systems, capital structure, and unemployment rates have a negative and significant effect on economic stability. This means that increases in these three variables tend to reduce a company's economic stability, either due to potential inefficiency, high debt burdens, or weakened purchasing power. On the other hand, inflation has been shown to have a positive and significant impact on economic stability, indicating that, within certain limits, rising inflation can increase corporate revenues through price adjustments. Overall, these four variables have been shown to have a significant impact on corporate economic stability.