The Effect of Asset Structure and Agency Costs on Debt Policy with Profitability as an Intervening Variable

Abstract

The data for this study were gathered from the annual financial statements of food and beverage companies listed on the New York Stock Exchange using a purposive sampling technique that fits the research criteria. The research was conducted over a five-year period, with as many as 70 data points collected from 14 food and beverage sub-sector businesses. This study employs a variety of linear analytic techniques in conjunction with secondary data types. The study's findings indicate that asset structure and agency costs have a concurrent effect on profitability, and that asset structure, agency costs, and profitability all have a concurrent effect on leverage. Asset structure has a detrimental effect on profitability but a beneficial effect on leverage. Agency costs have a negative effect on profitability but a good effect on leverage. Leverage is adversely affected by profitability. The research demonstrates that organizations that focus on asset structure and agency expenses can overcome debt policies and boost profitability.