Determinant Factors of Investment in Property and Real Estate Companies on the IDX

Abstract

The property and real estate sector drives economic growth but is highly sensitive to economic changes, requiring companies to carefully manage internal factors and investment decisions to sustain business and enhance value. This study aims to analyze the effects of business risk, asset structure, and profitability on investment and to examine the role of debt as a moderating variable in companies in the property and real estate sector listed on the Indonesia Stock Exchange for the period 2022–2024. This is because previous studies have showed inconsistent results regarding the influence of corporate fundamental factors on investment, particularly in the property and real estate sector in Indonesia, and there remains a limited number of studies that include debt as a moderating variable. This study employs a quantitative approach using secondary data obtained from the companies’ financial statements. The sampling technique used purposive sampling, resulting in a sample of 58 companies with a total of 155 units of analysis. The analysis method used is Moderated Regression Analysis (MRA) with the assistance of IBM SPSS 21. The results of the study show that business risk and asset structure do not affect investment, meanwhile profitability does affect investment. Furthermore, debt was found to moderate the effect of business risk on investment, but it was not able to moderate the effects of asset structure and profitability on investment. These findings support the Pecking Order Theory and the Trade-Off Theory, which explain that firms tend to prioritize internal financing in investment decisions but still utilize debt to maintain investment continuity when facing business risk. This study suggests that companies need to improve profitability and manage debt optimally to support investment decisions. However, since this study focuses solely on the property and real estate sector and has a short observation period, future research is advised to include macroeconomic variables and extend the study period to obtain more comprehensive results.