Title: Leverage and firm characteristics what matter? Data from the Indonesian Stock Exchange

Authors: Puji Handayati; Cipto Wardoyo; Lioni Indrayani; Yohanes Indrayono

Addresses: Faculty of Economics, Universitas Negeri Malang, Jalan Semarang 5, Malang 65145, East Java, Indonesia ' Faculty of Economics, Universitas Negeri Malang, Jalan Semarang 5, Malang 65145, East Java, Indonesia ' Faculty of Economics and Business, Universitas Pamulang, Jalan Pamulang Raya, Tangerang Selatan 15417, Banten, Indonesia ' Faculty of Economics and Business, University Pakuan, Jalan Pakuan, Bogor 16413, West Java, Indonesia

Abstract: The purpose of this study is to investigate the relations between firm characteristics and financial leverage for Indonesian publicly-held firms. Based on data obtained from 206 firms listed in the Indonesian stock exchange for the periods of 2007-2016, we hypothesise and find that financial leverage is negatively associated with a firm's profitability, and firm size. Furthermore, we predict and find that growth opportunity and median industry leverage is positively associated with financial leverage. Concerning asset tangibility, we did not find a significant relation with financial leverage. The findings of our study provide useful insights into understanding the factors that should be used by firm managers to make their financing decisions especially in Indonesian publicly-held firms.

Keywords: leverage; assets-tangibility; profitability; firm-size; market-to-book-ratio; median industry leverage; Indonesian publicly-held firms.

DOI: 10.1504/GBER.2022.125742

Global Business and Economics Review, 2022 Vol.27 No.3, pp.268 - 280

Received: 11 Oct 2020
Accepted: 06 Oct 2021
Published online: 27 Sep 2022 *

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