{'fraction_non_alphanumeric': 0.03321733628598545, 'fraction_numerical': 0.016977749657281452, 'mean_word_length': 5.231274638633377, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
Factors Affecting the Use of Leverage Among Manufacturing Firms in Indonesia

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.


INTRODUCTION
Technological advancement and the change of business pattern has forced many firms to keep innovating by increasing the operational effectivity and efficiency, thus they can keep going concern in facing the competition at national, regional, and global level. But sometimes in order to keep surviving, firms need externally additional funds that can be acquired from their policy to use leverage. The existence of leverage policy will indirectly increase the financial risk. (Ferris,et al., 2018) found out that firms adjust their book value of leverage whenever there is a change in market leverage, which aims to increase their equity values. (Blanchard, 2019) revealed that leverage is related to interest expenses, in which such expenses cause leverage risk. (Reinhart and Sbrancia, 2015) described that low nominal interest-rate help reduce the cost of leverage payment, meanwhile the negatively high real interest-rate can liquidate or erode the real value of government's leverage. (Sekar, et al., 2014) found out that the increase of leverage can increase the debt-to-equity ratio and the change of capital structure of a firm in deciding its operational financing. This phenomenon will indirectly affect the firm's working capital and liquidty. (Ponsian, 2014) also found out a negative correlation between firm size and profitability, which indicates that the decrease of liquidity may cause the increase of profitability. This implies that the longer time a firm needs to repay its debt to the creditor, the higher the firm's profitability becomes. The increase of profitability indirectly affects the firm's size. (Ibhagui and Olokoyo, 2018) stated that, the positive effect of firm size on its decision to use leverage can increase the firm's value. (Serghiescu and Văidean, 2014) showed that tangible assets (fixed assets) have negative impact on total debt ratio (leverage). (Fang, et al., 2019) stated that a firm's asset liquidity has significant effect on the optimal level of leverage use. Thus, a firm's leverage policy is an important matter related to the risk of its financing policy. (Florackis, et.al., 2015) showed a negative correlation between managerial ownership and the firm's leverage usage policy. (Sumanti and Mangantar, 2015) explained the relationship among managerial ownership, dividend policy, profitability, and leverage usage policy, of which all of them are related each other. The study conducted by (Sumanti and Mangantar, 2015) showed that the relationship between managerial ownership and dividend policy is significant, meanwhile the effect of leverage policy and profitability was not significant on dividend policy. Nevertheless, profitability has significant effect on firm value, but managerial ownership, leverage policy, and dividend policy do not. (Aygun, Ic, and Sayim, 2014) showed that institutional ownership has negative and significant impact on earning management, while the impact of financial leverage to earning management is negative and significant. (Hovey, 2011) showed that institutional ownership are not found to have significant relationship with the capital structure of the firm, whereas capital structure also covers the leverage. (Bamiatzi,et.al., 2017) conducted a study about the effect of foreign and domestic ownership on firm's leverage policy. The result showed that there is negative and significant effect of foreign and domestic ownership on debt ratio. This research was based on the researches conducted by (Florackis, et.al., 2015), (Ibhagui and Olokoyo, 2018), (Serghiescu and Văidean, 2014), (Fang, et al., 2019), (Ponsian, 2014), ( Aygun, Ic, and Sayim, 2014), and (Bamiatzi,et.al., 2017), in which a firm's decision to use leverage will affect the firm's profitability achievement which impacts the firm's value. This research analyzed more variable, which were ownership (managerial, institutional, and foreign) and financial ratio (asset composition and firm size) on firm's policy to use leverage, which was limited to the test on the effect of ownership variable (managerial, institutional, and foreign) and financial ratio variable (asset composition and firm size) on the firm's policy to use leverage within a relatively long period, which was during 2010-2017. The main objective of

Factors Affecting the Use of Leverage Among Manufacturing Firms in Indonesia
Margarita Ekadjaja 1 , Agustin Ekadjaja 2 , Halim Putera Siswanto 3* this research is to find out the determinants that affect a firm to use leverage, which can be utilized to increase the its value.

LITERATURE REVIEW
All firms have the same goal, which is to increase their shareholders' welfare, that can be reflected from the firm value. In enhancing their business activities, firms use external funds as their alternative sources of financing.
(Yazandfar and Öhman, 2015) and (Ahmed and Wang, 2013) argued that the high level of leverage proportion will decrease the firm value. (Kartikasari and Merianti, 2016) argued that debt ratio positively affects the firm performance. Shares ownership offered to managers is a firm's policy to enhance its performance and causes the managers as shareholders to manage the leverage optimally. Managerial ownership will affect the firm's financing policy through debt or right issue. Managers as firm's executives must be able to make the best policy that can increase the firm value. However, sometimes such phenomenon is in on contrast to the interests of shareholders that might be caused by information differences.
In this research, the dependent variable is leverage. (Brigham,et.al., 2015) defined that a firm's decision to use leverage is the firm's policy to acquire external fund. As an indicator, the Debt-Equity-Ratio (DER) is used.

RESULT AND DISCUSSION
The results of this research among manufacturing firms in Indonesia for the period of 2010-2017 can be seen in Table  1 as follows : The relationship between managerial ownership and the firm's decision to use leverage was positive, but not significant. This result is in line with the study conducted by (Hatem, 2015). Empirically, this insignificance might be caused due to the firms in Indonesia that were still in form of family business, therefore the managerial ownership was relatively low compared to the founders' shares ownership. Besides, the owners' perspective, viewing that the cost of debt was lower than those from other kinds of financing, caused them to use big leverage. The result of the study on the relationship between external ownership (institutional and foreign ownership) and the decision to use leverage is on the contrary to the research conducted by (Said, 2013). The relationship between 'institutional and foreign ownership's and a firm's decision to use leverage was positive and significant,

Advances in Economics, Business and Management Research, volume 145
because the institutional and foreign ownership preferred to using leverage along with their expectation to generate higher profitability. The relationship between firm size and its decision to use leverage was positive and significant. This is inline with the study from (Ibhagui and Olokoyo, 2018). The result of this study showed that the bigger the firm's size, the easier will be for the firm to acquire leverage, thus the firm tends to utilize the external financing. The relationship between asset structure and the firm's decision to use leverage was negative and significant, in which this phenomenon is in line with the study conducted by ( Determinants for the variables of managerial ownership, institutional ownership, foreign ownership, firm size, and asset structure toward a firm's decision to use leverage was 60.46%, and the remaining 39.54% was affected by other variables which were not explained in this study.

CONCLUSION
Based on data acquired from the financial reports of manufacturing firms' in Indonesia during the year 2010-2017, it can be revealed that the variables of institutional ownership, foreign ownership, and firm size positively and significantly affect the firm's decision on the use of leverage. Meanwhile, the variable of asset structure negatively and significantly affects the financial decision on the use of leverage, and last, the variable of managerial ownership has positive yet insignificant effect on such decision. The managerial implication of this study is that firms should pay more attention to institutional ownership, foreign ownership, firm size, and asset structure, when determining whether to use leverage in order to enhance its performance. On the other hand, managerial ownership can be ignored when considering whether to use the leverage, so implicitly it has no contribution on firm's performance.