Leverage Research Articles

How do liquidity and leverage affect reporting delays?

This study aims to identify factors that impact the reporting delay of financial reports for listed companies. Research on late submission of reports plays an important role not only for companies (finding ways to overcome signs of late submission of reports) but also for related stakeholders. Stakeholders will look for signs that indicate the company is likely to submit reports late and make their decision. The study used regression with Driscoll-Kraay standard errors for adjustment by analyzing 753 listed companies in the Vietnam stock market from 2016 to 2020. The STATA software version 15 is used in this study. The results show that liquidity (LIQ) and leverage (LEV) have a negative impact on reporting delay, while profit (return on total assets) and financial distress (ZSCORE) have no impact on reporting delay. From these results, the author provides some implications to help company owners’ better control the issue of reporting delays. At the same time, investors can also predict the late submission of reports by companies to develop suitable investment strategies. The investor can make investment decisions when the company has not yet reported. Issues of LIQ and LEV will be a signal predicting the reporting delay of reports by the company. From there, investors will have useful information before making their investment decisions.

Mendeteksi Faktor-faktor Pressure Terhadap Kecurangan Laporan Keuangan Menggunakan Artificial Neural Network

Fraudulent financial statements are the result of misstatements resulting from intentional acts or omissions, which could materially mislead readers of the financial statements. The focus in this research is to determine the most important pressure factors in detecting fraudulent financial statements. Pressure is one of the fraud risk factors in the fraud triangle. Pressure is a condition felt by management due to incentives to commit fraud, consisting of: financial stability by proxy (GPM, ACHANGE, SCHANGE, CATA, SALAR, SALTA, INVSAL), external pressure (LEV, FINANCE, FREEC), personal financial need (OSHIP), and financial target (ROA). Data collection method using secondary data on the manufacturing sector firms that are publicly listed on the Indonesia Stock Exchange in 2017-2021. The research method used is quantitative and the sampling method uses a purposive sampling technique, obtained 137 sample companies with 685 total data observed. Data were analyzed using an Artificial Neural Network. The findings indicated that the gross profit margin (GPM), cash flow from operating to total assets (CATA), demand for financing (FINANCE), leverage (LEV) and return on total assets (ROA) is the most important proxy in detecting fraudulent financial statement, while other proxies are not too important in detecting fraudulent financial statements.

<b>The Influence of Earnings Volatility on the Association among Leverage and Real Earnings Management</b>

The association between leverage (LEV) and Real Earnings Management (REM), as well as how the volatility of earnings affects this relationship, are examined in this paper. The study sample comprises all non-financial companies listed on the Pakistan Stock Exchange from 2004 to 2018. Due to the endogeneity issue between the variables and the two-step system Generalized Method of Moment (SYS-GMM) dynamic panel estimator, business risk will be used as an interaction term in the hypothetical model to examine the association between LEV and REM. The model will be further elaborated using agency theory and positive accounting theory. After examining the connection between LEV and REM, the study will examine how business risk affects earnings volatility for the Pakistan Stock Exchange.

Gender Equality, Climate Action and Affordable Clean Energy Practices Towards Firm Financial Performance of Oil and Gas PLCs

The purpose of this study is to investigate the impact of the disclosure extent of the practices of gender equality, climate action and affordable and clean energy towards firm financial performance of the Top 30 Malaysia’s Oil and Gas PLCs over a five-year period from 2018 to 2022. This study employed both the conceptual and theoretical framework as the direction of this whole research, where the independent variables are SDG 5 - Gender Equality, SDG 13 - Climate Action and SDG 7 - Affordable and Clean Energy. The dependent variable is related to firm financial performance which are proxied by the Return on Asset (ROA), Return on Equity (ROE) and Tobin’s Q. The control variables are represented by Firm Leverage (LEV), Firm Age (AGE) and Firm Size (SIZE). All the variables are supported by the stakeholder theory. Purposive sampling was employed within this descriptive and quantitative study. Secondary data employed was analyzed using the quantitative content analysis and panel data regression analysis as per the STATA v.14 software. The findings reflect significance across all models of Pooled Ordinary Least Square (OLS), Fixed Effect Model (FE), and Random Effect Model (RE) where the p-value of gender equality, climate action and affordable clean energy are all 0.0000. The novelty of this research in terms of methodological significance is that the data were collected using quantitative content analysis from the integrated and annual reports of the Malaysian PLCs using three scoring indices designed for the oil and gas industry. Novelty in terms of practical significance is that the findings from this research can be applied to the oil and gas PLCs in other countries other than Malaysia.

The impact of tax optimization and temporary differences on earnings management: The case of Vietnam

The purpose of this paper is to study the effects of tax optimization strategies used by Vietnamese companies for earning management through the use of temporary difference between accounting and taxable profit. Following the model of Cindy (2021), we leverage quantitative methods, built models and tested the impact of 08 factors on earning management (EM), tax optimization (ETR), deferred tax asset (DTA), deferred tax liability (DTL), deferred tax expense (DTE), company size (SIZE), financial leverage (LEV), return on assets (ROA), cash flow from operating activities (CFO). The sample we selected were 113 industrial enterprises operating in multiple sectors listed on the Vietnam Stock Exchange in the period between 2016-2020. Empirical results our sample have shown that earning management (EM) may be affected by DTA, ROA, cash flow from operating activities, and financial leverage under various motives. This study also aims at illustrating that other indicators relating to differences between accounting and taxable profit do not leave any remarkable impacts on the model. This means that enterprises operating in the industrial sector do not use or rarely use those indicators to implement EM.

Corporate Governance Practices and Capital Structure Decisions: A Two-Sector Comparative Analysis

Globally, many corporate failures and scandals can be attributed to inherent poor corporate governance practices and inappropriate mix of capital structure within the organization, which has led to poor performance. Meanwhile, the capital structure with the optimum balance of debt and equity is a crucial decision made by the Board of Directors to make companies successful. Specifically, the study determines the strength and direction of the relationship between board characteristics and the leverage ratio of selected consumer and industrial sectors in Nigeria. Secondary data were utilized for the study and sourced from the annual financial reports of the sampled thirteen consumer and industrial goods companies for the period of nine years between 2012 to 2020. The data were analyzed using both descriptive and inferential statistics to achieve the study objectives. Pairwise correlation and the granger causality test were used to determine the strength and direction of the relationship between board characteristics and the leverage ratio of selected companies in Nigeria. Findings revealed that both board independence (BIND) and board gender diversity (BGD) have a positive relationship with leverage (LEVR) while other variables are negatively correlated with it for both companies. Further findings revealed that only corporate governance variables that have a significant impact on consumer goods firms’ leverage also have a causal relationship with it whereas for industrial goods both the board size (BDSZ) and CEO pay slice (CEPS) have a uni-directional relationship that runs from leverage. It was concluded that the relationship between corporate governance practices and leverage can be sector-sensitive. It is therefore recommended that manufacturing companies in the country should put in place strict evaluation mechanisms to identify the most appropriate board characteristics that will help to select an optimum balance of capital structure at all time

DIVIDEND POLICY AND VALUE OF LISTED NON-FINANCIAL COMPANIES IN NIGERIA: THE MODERATING EFFECT OF INVESTMENT OPPORTUNITY

The relationship between dividend policy (DP) and the value of firms (FV) has been investigated by several researchers in different jurisdictions. However, the findings of these researchers have been always inconsistent. This is due to the other factors that affect this relationship, which include the investment opportunity (IO). This paper is therefore aimed to empirically examine the impact of dividend policy on firms’ value with investment opportunity as moderator. The population of the study consists of 102 listed Non-financial companies. Based on the criterion set by the researcher, a judgmental technique of sampling was used in selecting 30 non-financial companies from the year 2011 to 2020. Tobin’s’ Q (TQ) and Market Price Per share (MPS) are the proxies for firms’ value, while Dividend per share (DPS) dividend payout ratio (DPR) and dividend yield (DY) are the proxies for dividend policy. Investment opportunity (IO) was measured as fixed asset growth. The study also used Firms’ size (FSIZE), Leverage (LEV) and Industry dummy (IND) as control variables. Descriptive statistics, correlation, and Feasible Generalized Least Squares (FGLS) analysis were used. It was found that DP, DPR, and DY are statistically significant to influence TQ. While MPS was only influenced by DP and DY. It was also found that IO did not moderate the relationship between dividend policy and firm value. It is recommended that the management of corporations should put measures in place that will increase revenue and decrease expenses so that regular dividend payments could be maintained.

EXPLORING THE IMPACT CEO DUALITY, FIRM SIZE, AND BOARD SIZE ON CAPITAL STRUCTURE BASED ON THE KNOWLEDGE MANAGEMENT DURING THE COVID-19 PANDEMIC

In light of the COVID-19 epidemic, the aim of this study is to explore the influence of CEO duality, company size, and board size on capital structure with an emphasis on knowledge management. The study was done out in Bahrain over the period of a year with a cross-sectional design, concentrating on a sample of 12 companies listed in the industrial machinery industry. Data for the year 2022 was primarily derived from annual reports. The findings of the study reveal a significant and beneficial association between board size and financial leverage (LEV). It indicates that businesses with bigger boards typically display higher amounts of financial leverage. The existence of a broader board illustrates a variety of knowledge and expertise, which may enable better capital structure decision-making. The findings highlight how important it is to take board size into account while adopting a capital structure. The research also shows an effective and beneficial connection between CEO duality and financial leverage. This suggests that businesses with a CEO who doubles as the board chairman are likely to have greater amounts of financial leverage. Due to the potential concentration of decision-making power brought on by CEO duality, there may be A rise in taking chances and reliance on financing via debt. These results highlight how crucial CEO structure is in determining capital structure. The study also discovers a significant and advantageous relationship between firm size and financial leverage. Bigger businesses frequently use larger amounts of financial leverage, which may indicate that size affects capital structure decisions. The results suggest that larger companies may have more readily available financial resources, enabling them to take on greater quantities of debt to finance their activities and investments. The study's emphasis on Bahrain's industrial machinery market during the COVID-19 epidemic offers insightful information about the particular difficulties that businesses encountered in this situation. The study adds to the body of knowledge on business finance and knowledge management in times of crisis by investigating the effects of CEO duality, company size, and board size on capital structure. Overall, this study advances knowledge of the variables affecting capital structure choices in Bahrain's industrial sector.
 Based to these results, firm size, CEO duality, and board size have a big impact on how much capital a company can borrow. These findings underline the significance of taking these aspects into account when designing capital structure rules and the vital function that knowledge management plays in navigating complex and uncertain business contexts, like the COVID-19 pandemic. Our understanding of the interactions between corporate governance, company features, and capital structure decisions would be improved by additional study and analysis in this area.

Cash conversion cycle and financial performance: evidence from manufacturing firms of Bangladesh

PurposeThe purpose of the present study is to determine how the cash conversion cycle (CCC) affects the financial performance of manufacturing companies in Bangladesh.Design/methodology/approachThe authors have collected data of 61 Dhaka Stock Exchange (DSE)-listed firms from the 10 distinct manufacturing industries of Bangladesh for 18 years, from 2003 to 2020. The data have been analyzed through the two-steps system generalized method of moment (GMM) regression model, using profitability indicators return on asset (ROA) and earnings per share (EPS) as dependent variables, while CCC has been used as the independent variable, whereas asset turnover (ATO) and financial leverage (LEV) were used as control variables to assess the relationship between the CCC and financial performance.FindingsThe findings indicated that CCC has a negative connection with profitability – ROA and EPS, with the connection between CCC and EPS being highly significant. This indicates that reducing the inventory conversion time, reducing the period of receivable collection and making payments to creditors with potential delays might help Bangladeshi manufacturing firms boost their profitability. In addition, the firm-specific characteristics, namely ATO and LEV significantly affect the firm's profitability.Research limitations/implicationsThe research was based only on secondary sources and information was scarce. This research was conducted to determine the impact of the CCC on the corporate profitability of the manufacturing sector solely. There might be many other working capital variables that are still unexplored through this study.Practical implicationsThe current study's findings are consistent with the traditional rule that minimizing the firm's days of the cash cycle may optimize financial performance. The results of this research have added to the existing body of knowledge on the topic of working capital management (WCM). Future research endeavors can be initiated for assessing the impact of the CCC on the firm's profitability in other industrial sectors or to identify other working capital variables that have much impact on corporate profitability.Originality/valueThis study is an original work of the researchers and adds value to the current literature in the domain of WCM and corporate profitability. The present study is the first one that covers firms in all the manufacturing industries in Bangladesh. The corporate managers, creditors, investors and other concerned stakeholders will be benefited from the findings of the present study.

The Effect of Corporate Social Responsibility Disclosure Index on Firm Performance of Selected Sectoral Industries in Nigeria

Corporate Social Responsibility (CSR) initiatives are charitable events and methods for improving a company's image, satisfying key stakeholders, and increasing financial performance. The issue of CSR initiatives on capital growth and sustainability remains imperative for this study. Therefore, this study is set out to examine the effect of corporate social responsibility disclosure index on firm performance of selected sectoral industries in Nigeria and to investigate the effect of corporate social responsibility on market value of selected sectoral industries in Nigeria. This study adopts multi-stage sampling approaches. A quantitative method was used in which a deductive technique was adopted because the research was based on existing theories and findings from previous investigations. Descriptive statistics, correlation regression panel and cross sectional analysis were adopted for the purpose of this study. The result showed that CSR as a variable has the highest mean = 69.7608) with a standard deviation = 11.7713 indicates that CSR is the most sensitivity variable, while leverage (LEV) has the second highest mean = 55.0760 with a standard deviation = 182.3009 and SIZE has mean = 16.9473 with a standard deviation = 1.0996 indicates that the value of corporate SIZE is also a huge factor to the study. However, the correlations statistics shows that return on asset (ROE) has a positive correction = 0.4468 with return on equity (ROA) at 5 percent level of significant. TobinQ has a positive relationship with ROA = 0.5321 and ROE = 0.0842 at 5 percent level of significant respectively. CSR has a negative relationship with ROA = −0.0948*, ROE = −0.0760 and Tobin Q = −0.0734 at 5 percent level of significant respectively. SIZE has a positive significant relationship with ROA = 0.0589, ROE = 0.0826 and CSR = 0.2449. The findings revealed that firms in Nigeria are yet to significantly use CSR to promote their performances like what is done by firms in developed economies. Therefore, as part of the recommendation from this study, Nigerian firms are advised to pay more attention to being CSR responsible and find ways by which this can translate to improved profit and enhancement of their overall performances.

Determinant tax aggressiveness in Indonesia: The Influence of Profitability, Leverage, and Liquidity

Tax is one of the important elements that contribute to community service. The purpose of this research is to determine the relationship between tax aggression (TA) and the factors of Profitability (PRFT), Leverage (LVG), and Liquidity (LIQ). This study used secondary data from the company's annual report accessed through the company's official www.idx.co.id website. The research population consisted of the 48 mining businesses listed on the Indonesia Stock Exchange (IDX) during the years 2017 and 2021. Purposive sampling used a sample of 70 company data to select the sample in this study. The data analysis method involved in this study was multiple regression analysis. The data were analyzed using version 25 of the SPSS software for Windows. The results of this study show that PRFT and LIQ affect TA, while LVG does not affect TA. This research can contribute to the government, especially in increasing taxpayer compliance through factors that influence TA

The Effect of Corporate Social Responsibility Disclosure Index on Firm Performance of Selected Sectoral Industries in Nigeria

Corporate Social Responsibility (CSR) initiatives are charitable events and methods for improving a company's image, satisfying key stakeholders, and increasing financial performance. The issue of CSR initiatives on capital growth and sustainability remains imperative for this study. Therefore, this study is set out to examine the effect of corporate social responsibility disclosure index on firm performance of selected sectoral industries in Nigeria and to investigate the effect of corporate social responsibility on market value of selected sectoral industries in Nigeria. This study adopts multi-stage sampling approaches. A quantitative method was used in which a deductive technique was adopted because the research was based on existing theories and findings from previous investigations. Descriptive statistics, correlation regression panel and cross sectional analysis were adopted for the purpose of this study. The result showed that CSR as a variable has the highest mean = 69.7608) with a standard deviation = 11.7713 indicates that CSR is the most sensitivity variable, while leverage (LEV) has the second highest mean = 55.0760 with a standard deviation = 182.3009 and SIZE has mean = 16.9473 with a standard deviation = 1.0996 indicates that the value of corporate SIZE is also a huge factor to the study. However, the correlations statistics shows that return on asset (ROE) has a positive correction = 0.4468 with return on equity (ROA) at 5 percent level of significant. TobinQ has a positive relationship with ROA = 0.5321 and ROE = 0.0842 at 5 percent level of significant respectively. CSR has a negative relationship with ROA = −0.0948*, ROE = −0.0760 and Tobin Q = −0.0734 at 5 percent level of significant respectively. SIZE has a positive significant relationship with ROA = 0.0589, ROE = 0.0826 and CSR = 0.2449. The findings revealed that firms in Nigeria are yet to significantly use CSR to promote their performances like what is done by firms in developed economies. Therefore, as part of the recommendation from this study, Nigerian firms are advised to pay more attention to being CSR responsible and find ways by which this can translate to improved profit and enhancement of their overall performances.

Stakeholder-Centered Corporate Governance and Corporate Sustainable Development: Evidence from CSR Practices in the Top Companies by Market Capitalization at Shanghai Stock Exchange of China

This study aims to investigate the nature and intensity of changes in corporate sustainable development as a result of certain relationships between stakeholder-centered corporate governance (CG) and corporate social responsibility CSR practices in the leading firms with respect to their market capitalization (MC) in the Shanghai stock exchange (SSE) of China. This study selected the top 100 companies from the manufacturing sector at the Shanghai Stock Exchange by (MC) for a period of 10 years (2012–2021). For this quantitative study, financial and CSR performance data were collected from the China Securities Market and Accounting Database (CSMAR), a reliable database for examining research on Chinese listed companies. For the data analysis, we applied different statistical tools that include descriptive statistics; a correlation matrix, fixed effect regression analysis, and moderation analysis of the effect of government subsidies on the relationship between explanatory variables and the dependent variable (firm performance) were applied. The result of the adjusted R-square values suggests that there has been a considerable change in the value of explained variable Firm Performance (FP), represented by ROA, TbQ, and Grow caused by the explanatory variables of the study, including Government-centered responsibility (GCR), community-centered responsibility (COMCR), firm age (FA), firm size (FS), and leverage (LV). Supplier-centered responsibility (SCR), customer-centered responsibility (CCR), creditor-centered responsibility (CRCR), and total risk (TR) were, respectively, at a 1% and 5% level of significance. The values extracted from the moderation effect show that Sub is a key factor in motivating the well-established large firms to focus on stakeholders-centered CSR practices, which ultimately improves the FP in the short and long run.

Effect of bankruptcy risk on value of conglomerate firms in Nigeria

The study examined the effect of bankruptcy risk on value of conglomerate firms in Nigeria. Ex post facto design was used and data for the study was collected from the Nigerian Exchange Group (NGX Group) Factbook covering from 2017-2021. The design was used since the data is secondary in nature which cannot be manipulated. The study used key proxy variables of leverage (LEV), liquidity (LIQ), profitability (PROF) and firm size (FS) as a measurement for bankruptcy risk while firm value on the other hand, was proxy using net assets per share (NAPS). Four hypotheses were used in the study while regression model was employed in the data analysis. The results of the study indicate that profitability, liquidity, leverage and company size significantly impacted firm value in Nigeria at 1-5% significant level. The study concludes that bankruptcy risk has influenced firms’ value over the years. Hence, the study is crucial as it exposits the influence of bankruptcy risk on firms value in Nigeria. The study's outcome should be considered as a signal to company managers when considering their liquidity position, leverage, profitability and company size, as it could be an indication for corporate bankruptcy risk.

The impact of sustainability reporting on a company’s financial performance: Evidence from the emerging market

The potential impact of sustainability reporting on a company’s financial performance could be measured through its stock price, profitability, or other financial metrics. This research aims to investigate the relationship between sustainability reporting and financial performance, in order to provide insights for companies, investors, and other stakeholders on the potential benefits and drawbacks of sustainability reporting. The research community of this study is formed out of all the 13 Jordanian commercial banks listed in the Amman Stock Exchange, and covering the period from 2012–2021. The study is a census study as it involves collecting data from every member of the study population, which allows for a comprehensive analysis of the relationship between sustainability reporting and financial performance. The data was collected from publicly available sources and analyzed using multiple regression analysis. The results of the study suggest that there is a strong linear relationship between sustainability reporting and the dependent variables return on assets (ROA) and financial leverage (LEV), but the relationship between sustainability reporting (SR) and return on equity (ROE) is not statistically significant. These findings provide insights for companies, investors, and other stakeholders on the potential benefits and drawbacks of sustainability reporting and can inform decision-making around sustainability initiatives.

The effect of macroeconomics and supply chain finance (SCF) on profitability: Evidence from manufacturing companies

This paper examines the effect of macroeconomics and supply chain finance (SCF) on the profitability of the manufacturing companies, specifically in Indonesia from 2017 to 2021. Furthermore, the study demonstrates the critical role of macroeconomics and SCF in profitability through the use of general moment method (GMM). The results indicate that cash conversion cycle (CCC) is detrimental to profitability (P), while macroeconomics has a positive impact on it. In addition, strong profitability is negatively and positively correlated with the leverage (LEV) and sustainable supply chain management (MRPB) control variables, respectively.

FIRM SPECIFIC DETERMINANTS AND ITS IMPLICATION ON LISTED OIL AND GAS FIRMS PROFITABILITY IN NIGERIA

The study examined the analysis of firm specific determinants of profitability (PROF) of listed Oil & Gas firms in Nigeria between the periods of 2011-2020. The study made used of secondary data which was sourced from the annual reports and accounts of the various 10 Oil and Gas Firms for the measures of firm specific determinants [Firm Size (FS), Firm Age (FA), Liquidity (LIQ), Leverage (LEV), Sales Growth (SG) and Operating Expenses (OE)] in relation to profitability proxy with Return on Assets (ROA). Descriptive statistics and the correlation analysis were used to determine the nature of relationship between the independent and dependent variables. In view of the hypothesis formulated for this research, the method of data analysis chosen was a multiple regression analysis using E-VIEW 9.0 computer software. The findings revealed that LIQ, LEV and OE have significant relationship on ROA while FS, FA and SG does not have significant relationship on ROA relationship with ROA. Hence, the study concluded that there is a significant relationship between firm specific determinants and the PROF of listed Oil & Gas firms in Nigeria. This study recommended among others that Listed Oil and Gas Firms should increase their FS so as to increase the return on assets of their firms.
 Keywords: Profitability, Liquidity, Leverage, Firm Size and Return on Asset.

Peranan Tata Kelola Perusahaan dalam Pencegahan Saji Ulang Laporan Keuangan Perusahaan Manufaktur yang Terdaftar di BEI Periode 2017-2021

This study aimed to identify the mechanisms of corporate governance can affect misstatement of financial statements, in particular after the implementation of IFRS in financial accounting standards in Indonesia. Especially in manufacturing companies listed in Indonesia Stock Exchange 2017-2021 period. Sampling technique used in this study aimed is purposive sampling with the number of samples used as many as 70 companies. The variables used in this study is the proportion of the Board of the Independent Commissioner (Commissioner), Ownership Structure Institutional (INTSOWN), structure of ownership (BLOCK), Corporate Audit (AUDIT), Company Size (SIZE) and Leverage (LEV) as independent variables, and restatements (RSTM) as the dependent variable. The analytical method used in this research is the logistic regression models. The results of this study indicate that the independent variable The proportion of Independent Commissioners (KOMISARIS) X1, Company Scale (SIZE) X5 and Leverage (LEV) X6 have a significant effect on the dependent variable Restatement (RSTM). While the independent variables Institutional Ownership Structure (INTSOWN) X2, Share Ownership Structure (BLOCK) X3 and Audit Company (AUDIT) X4 have no significant effect on the dependent variable Restatement (RSTM).

The Influence of Bank Characteristics on Financial Performance with Intellectual Capital as Intervening Variable (Study on National Commercial Banks in Indonesia)

This study aims to examine the effect of bank characteristics on financial performance using 7 financial proxies on bank characteristics from market concentration of third party funds (HDPK), credit market concentration (HLOA), capital adequacy (CAR), bank liquidity (LDR), bank efficiency. (BOPO), non-performing loans (NPL), leverage (LEV), and Financial Performance with the proxy of Return On Assets (ROA) as the dependent variable and Intellectual Capital as the Intervening variable. The method of data collection in this study is to collect secondary data. This research is focused on National Commercial Banks in Indonesia. The results of this study obtained that there is a significant effect between Bank Characteristics on Financial Performance with a T-Statistic of (5.360 > 1.96) and a coefficient value of 0.838. The effect of bank characteristics on intellectual capital has a significant effect with a T-statistic of (4,089 > 1.96) and a coefficient value of 0.626. Furthermore, the influence of Intellectual Capital on Financial Performance does not have a significant T-statistical effect of (0.304 < 1.96) and the coefficient value is -0.058.

The Relationship between Non-Performing Loans and Size on Leverage in Indonesia Stock Exchange

Today, the banking sector plays a vital role in achieving national goals for increasing the living standards of the community and supporting the running of the economy, considering its function as an intermediary institution, payment transaction, and transmission tool for monetary policy. Thus, this study seeks to examine the effect of Non-Performing Loan (NPL), Size (SIZE) on Leverage (LEV). Panel data regression is applied to achieve the proposed objective. The data collected from commercial bank companies listed on the Indonesia stock exchange (IDX) started from 2016 to 2019 with 43 banks. The result shows that NPL and SIZE positively and significantly affect LEV. In conclusion, this study has identified the relationship between Non-Performing Loans (NPL), Size (SIZE) and Leverage (LEV). Also, the studied variable indicated that NPL and SIZE significantly and positively affect LEV.