The Influence of Sales Growth and Earnings Management on Financial Performance: The Role of Firm Size Moderation

Abstract

This study analyzes the influence of sales growth and earnings management on financial performance and examines whether firm size moderates the relationship in Consumer Non-Cyclicals companies listed on the Indonesia Stock Exchange during the period 2021–2024. Financial performance is proxied by Return on Assets (ROA), earnings management by discretionary accruals using the Modified Jones Model, sales growth by annual sales change, and firm size by the natural logarithm of total assets. The study uses a causal quantitative design with panel data and Moderated Regression Analysis (MRA) using EViews 12. Purposive sampling in the early stages resulted in 46 companies with 184 company-year observations; after outlier screening, 167 observations were used in the model estimation. The selected model was the Random Effects Model. The results showed that sales growth had no significant effect on financial performance (p = 0.2101), while earnings management had a positive and significant effect (p = 0.0126). Firm size significantly moderated the influence of sales growth on financial performance in a negative direction (p = 0.0488), thus acting as a pure moderator that weakened the sales growth–ROA relationship. Firm size was not proven to moderate the relationship between earnings management and financial performance (p = 0.4127). These findings suggest that revenue increases alone are not enough to increase profitability if operating costs and asset use are not managed efficiently, while reported ROA remains sensitive to discretionary accruals.