The Manufacture and Service Companies Differ Leverage Impact to Financial Performance

Abstract

The purpose of this research is to examine the leverage from firm. The firms use leverage to expand their source of fund by using external fund such as debt. By usingdebt, financial performance of the firm will develop. Beside the leverage, the use of size and inflation are also considered to be the factors that influence the financial performance while the firms are using leverage. As an independent variable, size is reflected by the assets and the leverage or debt by using the debt ratio to the total of assets. Then,the financial performance is reflected by using the return on the measured assets. Inflation as a control variable is included in this research to know the effect towards the financial performance. In this research, firms are divided into two sectors, there are manufacture and service sector. By using the manufacture and service sectors in order to know each effect of leverage toward the financial performance, this research focuses to the unique characteristic of these two sectors. Knowing which sector is influenced more by the leverage than the others, will guide the urgency of this research. This research used the pooled data regression method, 468 data entries of 156 listed firms in Indonesian Stock Exchange. This research was conducted from 2015 until 2017. The result shows that leverage significantly has a negative effect towardthe financial performance and the size positively influences financial performance. Manufacture sector is influenced more in leverage towardsthe financial performance, and the service sector is influenced more on size towardsthe financial performance.

Corporate Social Responsibility and Leverage Level on High Profile Industries at Indonesian Stock Exchange of 2015-2019 Period

“…This condition can make investors afraid to invest their money in the company. The use of debt will determine the level of the company's financial leverage because if it uses more debt than its own capital, the fixed burden to be borne by the company becomes high and this condition can make the company's performance to decline (Yoon and Jang, 2005;Shaferi et al, 2020). H 2 : Company leverage has negative impact on the company financial performance.…”

“…Tsoutsoura (2010) and Ali (2020) found that leverage is negatively related to financial performance because greater debt has the potential to increase the risk of the company so that investors are hesitant to invest in the company. The use of debt will determine the level of financial leverage of the company because if there is more debt than own capital, the fixed burden borne by the company will be high, which can reduce the financial performance (Shaferi et al, 2020).…”

The Impact of Size on the Performance of Transnational Corporations Operating in the Textile Industry in Portugal during the COVID-19 Pandemic

“…Another study [49] examined the leverage of companies in manufacturing and services. The authors measure the impacts of debt, company size and inflation on financial performance.…”

Leverage dan Market Share sebagai Faktor Penentu Posisi Persaingan Pasar Perusahaan Manufaktur di Indonesia

“…Perbedaan ini didasari oleh kondisi keuangan Perusahaan dan pola pengambilan keputusan tiap manajer dalam pemilihan dana Perusahaannya (Bas et al, 2009;Kayo et al, 2018). Penggunaan leverage seringkali digunakan pada Perusahaan Manufaktur yang memiliki bermacam-macam Industri (Amedi & Mustafa, 2020;Shaferi et al, 2020) sehingga penggunaan struktur modal menjadi lebih kompleks (Gobenvy, 2014), ditambah lagi dengan persaingan pada dunia bisnis yang semakin tajam yang mengharuskan Perusahaan untuk terus mempertimbangkan faktor-faktor persaingan pasar yang terus berkembang (Boubaker et al, 2017).…”