THE SYNERGY OF FINANCIAL LEVERAGE, CAPITAL STRUCTURE, CORPORATE GOVERNANCE, AND MARKET DYNAMICS IN ENHANCING THE COMPETITIVENESS OF TECHNOLOGY BUSINESSES

Abstract

The rapid evolution of the technology industry has intensified the need for integrated financial and governance strategies to sustain competitiveness in volatile markets. This study investigates the synergy among Financial Leverage (Debt to Equity Ratio), Good Corporate Governance (GCG), and Stock Volatility in improving business competitiveness, proxied by Return on Equity (ROE), within a case simulation of Company XYZ, a technology firm in Indonesia. Utilizing a quantitative explanatory approach with 30 observations, the research applied multiple linear regression and classical assumption tests to assess the relationship between internal financial structure, governance quality, and external market pressures. The results reveal that GCG Score has a significant positive effect on ROE (p = 0.000), indicating that strong governance frameworks enhance financial competitiveness through improved transparency and accountability. Conversely, the Debt to Equity Ratio negatively affects ROE (p = 0.004), confirming that excessive leverage increases financial risk and suppresses profitability, in alignment with the Pecking Order Theory. Stock Volatility was found to be statistically insignificant, suggesting that short-term market fluctuations have minimal influence on strategic financial performance. The findings support key tenets of both Agency Theory and modern corporate finance literature, reinforcing the vital role of balanced capital structure and governance quality in shaping competitive advantage. This study contributes to the literature by presenting a holistic framework integrating internal and external financial factors.