Factors Affecting the Use of Leverage Among Manufacturing Firms in Indonesia

Abstract

A firm's decision to use leverage becomes a controversial policy between the managers and shareholders. The aim of this study was to reveal the determinants that affect a firm's decision to use leverage. Data was collected from financial reports of manufacturing firms in Indonesia during the years of 2010-2017. Based on data analysis by using Eviews 6.0, it can be revealed that institutional ownership, foreign ownership, and firm size positively and significantly affected a firm's decision to use leverage. Meanwhile, asset structure had negative and significant effect, and managerial ownership had positive yet insignificant effect on such decision.

The Moderating Role of Good Corporate Governance on the Influence of Company Size, Share Value, Profitability, and Financial Leverage on Income Smoothing (Study of Primary Consumer Goods Companies listed on the BEI in 2020-2022)

“…The company which can be categorized as a small firm, medium firm, and large firm (Dini & Fau, 2022) Ln total asset (Ekadjaja, 2020) 2 Share Value Measuring share value can be done using the market price formula and book value per share (Saputri & Suwarno, 2023) Price 2 show that the company size has a minimum value of 25.7034, a maximum value of 32.8264, and an average of 29.331547. This means there is a difference in the size value of the companies studied compared to the average value of 1.5417139.…”

“…Company size has various proxies, including total assets, number of employees, share market value, and log size. Company size calculations use the natural logarithm for total assets (Ekadjaja, 2020). The size of a company's assets is called company size.…”

Peran Firm Size Sebagai Moderasi Dalam Faktor-Faktor Yang Mempengaruhi Firm Value

“…Dalam konteks penelitian ini, perusahaan dengan sampel yang besar dengan biaya kebutuhan modal yang besar tentu membutuhkan pendanaan hutang yang dalam jumlah besar yang dapat menjadi bumerang bagi perusahaan bila tidak berhati-hati. Hal ini juga sesuai dengan penelitian dariEkadjaja et al, (2020);Hatem, (2015) yang menyatakan bahwa leverage perusahaan membentuk inverse U-shaped Sementara itu, peran firm size dalam memoderasi pengaruh asset management terhadap firm value memiliki kontribusi positif sebesar 0.43 dengan nilai signifikansi 0.0216 < 0.05. Dapat disimpulkan bahwa peran firm size sendiri memiliki kontribusi yang baik dalam memperkuat hubungan asset management terhadap firm value.…”