The Role Of Intellectual Capital In Moderating The Influence Of Capital Structure On Profit Persistence

Abstract

This study aims to understand how Intellectual Capital (IC) moderates the impact of capital structure on profit persistence. Utilizing data from companies listed in the Indonesia Stock Exchange's Quality 30 Index during the effective constituent period from February 3rd to August 2nd, 2023, this research investigates both the direct and indirect relationships between capital structure and profit persistence. The methodology includes using the Long-Term Debt to Equity Ratio (LTDER) to measure capital structure, while IC is gauged through the Value-Added Intellectual Coefficient (VAIC). This analytical approach is expected to unveil the influence of IC on strengthening the relationship between capital structure and profit persistence. The results indicate that capital structure does not have a direct impact on profit persistence; however, IC acts as a significant moderating variable, highlighting the importance of investment in IC to enhance the positive influence of capital structure on profit persistence. These findings affirm that beyond structural factors, the component and development of intellectual capacity play a critical role in enhancing long-term financial performance. This research provides new insights into the importance of synergy between capital management and intellectual resource development strategies in improving corporate financial performance.