Operating Cash Flow Volatility, Sales Volatility, Debt Level, and Earnings Persistence: The Moderating Role of Firm Size in Indonesia's Food and Beverage Industry
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Abstract
This study aims to examine the effect of operating cash flow volatility, sales volatility, and debt level on earnings persistence, with firm size serving as a moderating variable, in food and beverage companies listed on the Indonesia Stock Exchange during the 2021–2023 period. A quantitative research approach was employed using secondary data obtained from annual financial statements. The sample consisted of 39 companies, resulting in 117 firm-year observations selected through purposive sampling. Data were analyzed using multiple linear regression and Moderated Regression Analysis (MRA). The findings reveal that operating cash flow volatility has no significant effect on earnings persistence. In contrast, sales volatility and debt level have a positive and significant effect on earnings persistence. Furthermore, firm size significantly moderates the relationship between operating cash flow volatility and earnings persistence but does not moderate the relationships between sales volatility, debt level, and earnings persistence. These findings indicate that earnings sustainability is more strongly influenced by effective sales management, capital structure decisions, and firms' ability to manage cash flow fluctuations than by the stability of operating cash flows alone. The study provides theoretical implications by extending the application of Signaling Theory and Agency Theory in explaining earnings persistence, while offering practical implications for corporate managers, investors, and creditors in improving earnings quality through effective operational and financial management. The novelty of this study lies in examining the moderating role of firm size in the relationship between operating cash flow volatility, sales volatility, debt level, and earnings persistence within Indonesia's food and beverage industry.
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