2022•Journal of Accounting InquiryOpen access

The Effect of Leverage, Firm Size, Profitability, and Liquidity on Hedging Decisions

Heri Purwanto, Rosyid Nur Anggara Putra

Abstract

Purpose: This study aims to determine the effect of leverage, firm size, profitability, and liquidity on hedging decisions of manufacturing companies listed on the Indonesia Stock Exchange (IDX) Methodology: The sample in this study are 22 manufacturing companies listed on the IDX from 2014 to 2019. This research uses the logistic regression analysis technique. Findings: The results show that the variable leverage, firm size, and profitability have a positive effect and are significant on hedging decisions, while the liquidity variable has no effect on hedging decisions. Novelty: This study continues previous research by using a different population, adding independent variables, and using the manufacturing sector. Keywords: Leverage, Firm Size, Profitability, Liquidity, Hedging

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Key concepts: Profitability index, Leverage (statistics), Market liquidity, Stock exchange, Business, Logistic regression, Econometrics, Variables