The Effect of Leverage and Firm Size on Financial Performance of Property and Real Estate Companies Listed on the Indonesia Stock Exchange (IDX) for the 2020–2024 Period

The recovery of net profit in Indonesia's property and real estate sector after the Covid-19 pandemic has not been matched by a comparable improvement in asset efficiency, while the use of debt tended to increase during 2020–2023. This study examines the effect of leverage and firm size on the financial performance of property and real estate companies listed on the Indonesia Stock Exchange (IDX) for 2020–2024. Purposive sampling produced 50 companies and 250 firm-year observations; after removing 37 outliers (Z-score outside ±3.00), 213 observations were analyzed. Leverage is measured by the debt to equity ratio (DER), firm size by the natural logarithm of total assets, and financial performance by return on assets (ROA). Multiple linear regression was estimated in IBM SPSS Statistics 27, and autocorrelation was corrected with the Cochrane-Orcutt procedure. The results show that leverage has a negative and significant effect on ROA (β = −0.018; t = −6.949; p < 0.001), firm size has a positive and significant effect on ROA (β = 0.005; t = 6.099; p < 0.001), and both variables simultaneously affect ROA significantly (F = 24.759; p < 0.001; Adjusted R² = 0.252). The findings support trade-off theory, signaling theory and agency theory. The study recommends that property companies control the proportion of debt in their capital structure and expand their asset base gradually with balanced funding.