Leverage, Profitability, Firm Size, Exchange Rate, and Systematic Risk: Evidence from the Manufacturing Industry in Indonesia


  • Enjelin Rosari Wiyono Universitas Airlangga. Indonesia
  • Agus Widodo Mardijuwono Universitas Airlangga. Indonesia


Systematic risk, a type of manageable risk for firms, enables business management to perceive and take necessary actions to counter market risks. This study looked into leverage, profitability, firm size, exchange rate, and systematic risk. This study analyzed secondary data retrieved from 369 manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2016 to 2018. The multiple linear regression analysis was adopted to test the hypotheses, while SPSS was applied to perform data analysis. The study outcomes revealed that leverage had a significantly negative relationship with systematic risk, while profitability and firm size displayed a significantly positive relationship with systematic risk, and exchange rate did not exhibit any significant relationship with systematic risk. The study offers managerial implications that leverage should be managed well to understand systematic risk, mainly because high leverage generates more risk for a firm. Firm profitability and firm size offer a good understanding of firm-level systematic risk. Study limitations and future research endeavors end this paper.