The Effect of Capital Structure, Cash Holdings, and Diversification Strategy on Financial Performance with Commodity Price Volatility as a Moderating Variable

Abstract

This study aims to analyze the effect of capital structure, cash holdings, and diversification strategy on financial performance, and to examine the role of commodity price volatility as a moderating variable. The sampling technique used is non-probability sampling with a purposive sampling approach. The data used are secondary data sourced from the annual financial reports of metal and mineral subsector companies listed on the Indonesia Stock Exchange for the period 2021–2024. The analysis technique employed is panel regression Fixed Effect Model (FEM) with Moderated Regression Analysis (MRA) using Eviews 12. The study found that capital structure and diversification strategy negatively affect financial performance, while cash holdings have no significant effect on financial performance. Furthermore, commodity price volatility does not moderate the relationship between capital structure, cash holdings, and diversification strategy and financial performance. This study implies that optimizing the management of internal resources plays a more important role in improving the financial performance of metal and mineral subsector companies than external factors. thereby reinforcing the relevance of the Resource-Based View (RBV) and providing insights for managerial, investment, and policy decision-making. Future research may expand the sample coverage and observation period, as well as adopt alternative approaches to measuring diversification strategy and commodity price volatility