Determinants of Financial Performance and Sustainable Growth Rate: An Empirical Study in Emerging Markets

DOI

10.2991/978-2-38476-366-5_17How to use a DOI?

Keywords

Financial Performance; Empirical Study; Emerging Markets

Abstract

Sustainable Growth Rate (SGR) is crucial for a company’s sustainability as it reflects the level of growth achievable without seeking external capital. This study aims to analyze the effects of profitability, liquidity, and company size on financial performance and their impact on the company’s SGR. Data for this research was sourced from companies listed on the Indonesia Stock Exchange (IDX) between 2019 and 2023, with purposive sampling yielding 2365 company observations. The study employs multiple regression analysis to assess the relationships between the variables. The findings reveal that profitability has a positive and significant influence on both financial performance and SGR, while liquidity and company size do not significantly impact financial performance. Furthermore, financial performance is shown to positively and significantly affect SGR. The novelty of this research lies in its direct investigation of the link between financial performance and SGR within Indonesian firms, providing fresh insights into this unique context. By exploring the effects of key financial variables, this study offers a deeper understanding of how companies in emerging markets can foster sustainable growth. The study’s implications suggest that corporate managers should prioritize improving profitability as a vital factor in enhancing financial performance and driving sustainable growth. While liquidity and firm size do not contribute significantly in this context, profitability proves to be an essential factor. From the perspective of Stakeholder Theory, the research underscores that improving financial performance benefits not only shareholders but also all stakeholders, supporting the company’s long-term sustainable and stable growth.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Teguh Erawati
AU  - Reni Listyawati
AU  - Achmad Fijai
AU  - Resti Kristina Dewi
AU  - Fatikhah Fila Dina
AU  - Maghfirotus Shafira
PY  - 2025
DA  - 2025/02/28
TI  - Determinants of Financial Performance and Sustainable Growth Rate: An Empirical Study in Emerging Markets
BT  - Proceedings of the 1st International Conference on Social Environment Diversity (ICOSEND 2024)
PB  - Atlantis Press
SP  - 180
EP  - 189
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-366-5_17
DO  - 10.2991/978-2-38476-366-5_17
ID  - Erawati2025
ER  -