The Influence of Business Risk and Corporate Growth on Debt Policy

Abstract

Objectives – This study aims to analyze the influence of business risk and company growth on debt policy. Business risk reflects the uncertainty of operating profits, while corporate growth indicates the need for funding to support business expansion.

Design/methodology/approach – This study uses a type of quantitative research. The sample in this study is 92 Energy sector companies listed on the Indonesia Stock Exchange in 2022-2024. The analysis technique used to test the hypothesis is logistic regression analysis using the Eviews 9 software.

Findings – The results of the study show that business risk has a positive effect on debt policy, while company growth has a negative and insignificant effect on debt policy.

Limitations/Implications of Research – The first limitation of this study is that the measurement of business risk still uses one financial proxy so that it does not fully reflect the company's operational volatility. Second, the independent variables used are limited to business risks and company growth, so the model's ability to explain debt policy is still low and does not include other potentially influential factors. Third, the relatively short research period, namely 2022–2024, has not fully described the long-term dynamics of the energy industry. Fourth, the heterogeneity of subsectors in the energy industry causes the results of the research to need to be generalized carefully.

JEL : G31, G32, Q40, L94