Do Digitalization Affect on Relationship Firm Size and Financial Performance? Evidence from Emerging and Developed Countries

Abstract

This study aims to analyzed the effect of firm size and digitalization on financial performance. This study also analyzed the moderating role of digitalization in the relationship between firm size and financial performance. This study used a sample of manufacturing companies listed on the Emerging and Developed Countries on Stock Exchange in ASEAN for the period 2014-2023, i.e. Indonesia, Malaysia, and Singapore. The type of data in this study is secondary data obtained from the lseg.com. This study used unbalanced data with a total sample of 5.351 companies. The results of this study indicate that in every emerging and developed countries, firm size and digitalization do not always increase the financial performance of manufacturing companies as stated in signal theory. In Indonesia as an emerging country and Singapore as a developed country, firm size can improve the financial performance of manufacturing companies. These results are different from other emerging country, namely Malaysia, which show that firm size cannot financial performance. Digitalization in emerging country, namely Malaysia, can improve financial performance, but in other emerging countries, namely Indonesia and in developed country, namely Singapore, digitalization cannot improve financial performance. Furthermore, digitalization in developing countries, namely Malaysia, weakens the positive influence of firm size on financial performance, in contrast to other developing countries, namely Indonesia and Singapore, which shows that digitalization cannot weaken or strengthen the positive influence of firm size on financial performance.