The Effect of Profitability, Liquidity, and Asset Structure on Debt Policy with PSAK 71 as a Moderating Variable in Basic Material Sub- Sector Companies Listed on the Indonesia Stock Exchange for the Period 2020-2024

Abstract

Background: Indonesia's post-COVID-19 economic recovery requires companies to implement
appropriate financial policies, particularly in debt management as an external funding source. The
basic material sector is characterized by substantial capital requirements, thus tending to rely on
external debt financing. Previous studies show inconsistent results regarding the effects of
profitability, liquidity, and asset structure on debt policy. Additionally, the implementation of PSAK 71
since 2020, which regulates the recognition and measurement of financial instruments, potentially
moderates these relationships through enhanced financial reporting transparency.

Purpose: his study aims to analyze the effects of profitability, liquidity, and asset structure on debt
policy, and to examine the moderating role of PSAK 71 in basic material sub-sector companies listed
on the Indonesia Stock Exchange for the 2020-2024 period.

Methodology: This quantitative study uses a sample of 29 basic material companies from a
population of 109 on IDX for 2020-2024 (145 observations). Analysis employs panel data regression
with Moderated Regression Analysis (MRA) to examine the effects of profitability (ROA), liquidity (CR),
and asset structure on debt policy (DER) with PSAK 71 moderation.

Finding: Results show profitability and asset structure have positive significant effects, while liquidity
has a negative significant effect on debt policy. PSAK 71 significantly moderates the relationships
between profitability, liquidity, asset structure and debt policy, strengthening the effects of profitability
and asset structure while weakening liquidity's effect.

Limitation: Limitations include: (1) sample limited to basic material sector; (2) observation period
encompasses pandemic conditions; (3) limited variables; and (4) PSAK 71 measurement uses dummy
variable.

Originality: This research is original in its use of PSAK 71 as a moderating variable in examining the
relationship between profitability, liquidity, and asset structure on debt policy. The study focuses on
Basic Material sub-sector companies listed on the IDX during 2020–2024, a period rarely explored
under PSAK 71 implementation after the pandemic. Therefore, this study provides a new contribution
to understanding the impact of accounting standards on corporate financing policies in Indonesia.