Market Capitalization Volatility, Profitability, and Leverage: A Comparative Four-Case Study of Indonesia's Energy and Technology Firms

Hikmahwati Hikmahwati; Widya Ais  Sahla; Sandra Iriawan; Noor  Safrina; Nurul Qalbiah; Mark Gabriel Wagan Aguilar

doi:10.61255/jeemba.v4i5.1097

Authors

Hikmahwati Politeknik Negeri Banjarmasin, Indonesia
Widya Ais Sahla Politeknik Negeri Banjarmasin, Indonesia
Sandra Iriawan Politeknik Negeri Banjarmasin, Indonesia
Noor Safrina Politeknik Negeri Banjarmasin, Indonesia
Nurul Qalbiah Politeknik Negeri Banjarmasin, Indonesia
Mark Gabriel Wagan Aguilar Technological College, Philippines

DOI:

https://doi.org/10.61255/jeemba.v4i5.1097

Keywords:

Market Capitalization Volatility, Profitability, Leverage, Signaling Theory, Industry Sector

Abstract

Purpose – This exploratory study examines preliminary associations between market capitalization volatility, profitability, and leverage across four Indonesian energy and technology firms, drawing on Signaling Theory. With only two firms per sector, sector differences are treated as case-level heterogeneity, not established moderation.

Design/methodology/approach – Using a multi-case panel design, the study analyzes four Indonesian firms over 2014–2024 (44 firm-year observations): two energy firms (Adaro Energy, Indonesia Energy Corporation) and two technology firms (Telkom Indonesia, Elang Mahkota Teknologi). The small sample confounds sector with firm identity, so comparisons are descriptive, not tested moderation. VMC1 and VMC2 were recomputed as annual rolling-window series, replacing a prior full-period constant confounded with sector identity. Variables were z-standardized, volatility mean-centered before interaction terms, examined via marginal effects.

Findings/Results – Volatility is positively associated with profitability and negatively with leverage across all cases. With corrected VMC1/VMC2, sector does not moderate either association, stable across leave-one-firm-out checks. A lagged specification shows both associations disappear with temporal separation, indicating associative not causal relationships.

Originality/Value – The study offers a descriptive account of how an apparent sector-moderation finding can arise from a measurement artifact and disappear once corrected—a cautionary illustration for future research.

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