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This empirical investigation evaluates the individual and combined effects of financial leverage, equity proportion, and firm size on Economic Value Added (EVA) across manufacturing entities listed on the Indonesia Stock Exchange (IDX) during 2021–2025. EVA was selected over conventional accounting metrics because it accounts for the explicit opportunity cost of all capital sources, providing a superior measure of genuine economic value creation. Through purposive sampling, 20 eligible manufacturing firms were selected, forming a balanced panel dataset of 100 firm-year observations. Hypotheses were tested using multiple linear regression analysis after fulfilling diagnostic tests for normality, multicollinearity, and heteroskedasticity. The empirical output demonstrates that financial leverage (proxied by debt-to-equity ratio) significantly decreases EVA. Conversely, share proportion and firm size show positive and statistically significant contributions toward driving higher EVA. Jointly, the three predictor variables explain 82.2% of the variance in EVA, while the remaining proportion is influenced by factors outside the empirical model. These findings imply that excessive debt utilization beyond the optimal capital structure erodes corporate value creation, whereas strong equity foundations and expanded operational scales are vital for generating sustainable economic value.
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Nyala et al. (2026) studied this question.
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