<![CDATA[This study examines the influence of macroeconomic and firm-specific risks on the leverage of publicly listed Indonesian manufacturing and non-financial service firms. It also breaks down the divergence between sectors of risk responsiveness, which, in the capital structure literature for emerging markets, remains mostly uninvestigated. Using a sample of 99 publicly listed firms on the Indonesia Stock Exchange (IDX) from 2010 to 2019, we apply an Instrumental Variable (IV) and system- GMM estimator to control for endogeneity. The findings suggest that increasing macroeconomic risk and reducing firm-specific risk induces leverage, especially among service firms. These results also have policy implications for guiding firms in aligning their finance strategies to the sectoral risk they face and for assisting in formulating tailored policies that maintain robustness in the form of financial industry stability and corporate growth.]]>
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