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FORMOSA NEWS - Bekasi - Investing in human expertise, proprietary systems, and technological innovation does more than just enhance a company’s corporate valuation; it also increases its vulnerability to broader stock market fluctuations. This surprising double-edged sword was uncovered in a breakthrough financial study published in 2026 by researchers Atika Rahmi, Raisya Puspa Septiani, and Ria Fitria Andriani from Universitas Muhammadiyah Bekasi Karawang. Examining basic materials and industrial companies listed on the Indonesia Stock Exchange (IDX) between 2018 and 2022, the academic team mapped out how internal corporate characteristics alter how much market-wide risk a stock absorbs. Their discoveries provide critical, data-driven insights for investors, corporate executives, and financial regulators navigating volatile economic cycles.
Navigating the Heavy End of the Indonesian Economy
The basic materials and industrial sector serves as the capital-intensive backbone of the Indonesian economy, encompassing heavy manufacturing, cement, metals, and chemicals. Because these operations are intrinsically tied to global industrial demand and commodity supercycles, companies in this sector operate under constant macroeconomic pressure. Between 2018 and 2022, Indonesian industrial firms lived through a brutal market stress cycle. Following a relatively stable period in 2018 and 2019, the market experienced a massive dislocation in early 2020 when the IDX Composite index plummeted by approximately 37% in just a few weeks due to the COVID-19 shock, followed by a highly uneven recovery through 2022. During this volatile window, some corporate stocks barely flinched while others tracked the market crash point for point. While systemic forces like interest rate changes and geopolitical disruptions hit all firms simultaneously, this study sought to discover why individual stocks absorb market shocks differently. To answer this, the research team from Universitas Muhammadiyah Bekasi Karawang evaluated three internal drivers: Economic Value Added (EVA), capital gearing (debt-to-investment ratios), and intellectual capital.
Simplified Methodology: Decoding 205 Data Points
To maintain rigorous empirical standards, the authors employed a quantitative explanatory research design using verified secondary data. The team collected audited annual financial reports and historical stock price records directly from the official Indonesia Stock Exchange digital portal. Using purposive sampling, the researchers focused on 21 industrial and basic materials companies that maintained continuous listings and positive earnings throughout the five-year observation period. This method yielded 205 unique firm-year observations. Systematic risk was measured using the stock’s beta coefficient, calculated by comparing monthly company returns against the broader IDX Composite Index over a rolling 60-month window. Intellectual capital was calculated utilizing an efficiency framework that aggregates human expertise, structural databases, and operational networks. The final data panel was processed through rigorous regression modeling in EViews 13 to assess both direct impacts and indirect pathways mediated by market valuation.
Key Findings: The Paradox of Knowledge-Based Assets
The statistical analysis compiled by Atika Rahmi, Raisya Puspa Septiani, and Ria Fitria Andriani revealed several critical outcomes that challenge conventional corporate finance assumptions:
The insights generated by the Universitas Muhammadiyah Bekasi Karawang research group carry profound implications for the modern business world and the asset management industry. For corporate managers, the study demonstrates that building a competitive advantage through human capital and proprietary innovation is a double-edged sword. While it successfully generates an investor premium, it simultaneously places the firm under a magnifying glass of high investor expectations, leading to steeper stock corrections during global downturns. In their formal discussion, the authors emphasize that transparency around knowledge-intensive operations is no longer optional. When information asymmetry is high, outside investors are forced to estimate rather than know the true value of a company's internal capabilities, widening stock return distributions under uncertainty. This evidence suggests that regulatory authorities and exchange governors in Indonesia should consider implementing enhanced reporting standards that explicitly capture the intellectual asset bases of listed industrial corporations to protect market stability.
Author Profiles
Atika Rahmi, M.B.A. (Corresponding Author) is a senior lecturer and financial researcher at Universitas Muhammadiyah Bekasi Karawang. Her academic expertise centers on corporate finance, digital business management, and quantitative market models.
Raisya Puspa Septiani, M.Sc. is a financial scholar at Universitas Muhammadiyah Bekasi Karawang. Her research focuses on investor behavior, corporate governance frameworks, and stock exchange risk metrics.
Ria Fitria Andriani, M.Acc. is an accounting and corporate valuation specialist at Universitas Muhammadiyah Bekasi Karawang. Her research portfolio spans asset pricing, corporate performance measurement, and accounting information systems.
Source
Atika Rahmi, Raisya Puspa Septiani, Ria Fitria Andriani. Exploring the Impact of EVA, Capital Gearing, and Intellectual Capital on Systematic Risk: The Mediating Role of Corporate Value. Journal of Finance and Business Digital (JFBD). Vol. 5 No. 2, 187-202
DOI:https://doi.org/10.55927/jfbd.v5i2.22
URL: https://journaljfbd.my.id/index.php/jfbd
Navigating the Heavy End of the Indonesian Economy
The basic materials and industrial sector serves as the capital-intensive backbone of the Indonesian economy, encompassing heavy manufacturing, cement, metals, and chemicals. Because these operations are intrinsically tied to global industrial demand and commodity supercycles, companies in this sector operate under constant macroeconomic pressure. Between 2018 and 2022, Indonesian industrial firms lived through a brutal market stress cycle. Following a relatively stable period in 2018 and 2019, the market experienced a massive dislocation in early 2020 when the IDX Composite index plummeted by approximately 37% in just a few weeks due to the COVID-19 shock, followed by a highly uneven recovery through 2022. During this volatile window, some corporate stocks barely flinched while others tracked the market crash point for point. While systemic forces like interest rate changes and geopolitical disruptions hit all firms simultaneously, this study sought to discover why individual stocks absorb market shocks differently. To answer this, the research team from Universitas Muhammadiyah Bekasi Karawang evaluated three internal drivers: Economic Value Added (EVA), capital gearing (debt-to-investment ratios), and intellectual capital.
Simplified Methodology: Decoding 205 Data Points
To maintain rigorous empirical standards, the authors employed a quantitative explanatory research design using verified secondary data. The team collected audited annual financial reports and historical stock price records directly from the official Indonesia Stock Exchange digital portal. Using purposive sampling, the researchers focused on 21 industrial and basic materials companies that maintained continuous listings and positive earnings throughout the five-year observation period. This method yielded 205 unique firm-year observations. Systematic risk was measured using the stock’s beta coefficient, calculated by comparing monthly company returns against the broader IDX Composite Index over a rolling 60-month window. Intellectual capital was calculated utilizing an efficiency framework that aggregates human expertise, structural databases, and operational networks. The final data panel was processed through rigorous regression modeling in EViews 13 to assess both direct impacts and indirect pathways mediated by market valuation.
Key Findings: The Paradox of Knowledge-Based Assets
The statistical analysis compiled by Atika Rahmi, Raisya Puspa Septiani, and Ria Fitria Andriani revealed several critical outcomes that challenge conventional corporate finance assumptions:
- Intellectual Capital Heightens Systemic Risk: Financial models showed that higher intellectual capital investments exert a powerful, statistically significant positive effect on systematic risk. Knowledge-intensive companies exhibit wider return swings because their value rests heavily on intangible assets, which are inherently harder for outside investors to price accurately during market panics.
- Corporate Value Amplifies Market Sensitivity: A company’s market valuation (measured as the market-to-book ratio of assets) significantly increases systematic risk. High valuations embed steep forward-looking growth expectations, making the company’s stock price hyper-sensitive to downward macroeconomic revisions.
- Valuation Acts as a Direct Conduit: Corporate value formally mediates the relationship between intellectual capital and systematic risk. This means that while strong intellectual assets successfully drive up a firm's market premium, that elevated valuation simultaneously amplifies the stock's sensitivity to market-wide mood swings.
- Internal Capital Efficiency and Debt Proportions Do Not Drive Beta: Surprisingly, neither Economic Value Added (EVA) nor capital gearing demonstrated a statistically significant impact on systematic risk within this sector. Government credit facilities and debt moratoria during the 2020 pandemic likely insulated heavily geared firms from immediate financial distress.
The insights generated by the Universitas Muhammadiyah Bekasi Karawang research group carry profound implications for the modern business world and the asset management industry. For corporate managers, the study demonstrates that building a competitive advantage through human capital and proprietary innovation is a double-edged sword. While it successfully generates an investor premium, it simultaneously places the firm under a magnifying glass of high investor expectations, leading to steeper stock corrections during global downturns. In their formal discussion, the authors emphasize that transparency around knowledge-intensive operations is no longer optional. When information asymmetry is high, outside investors are forced to estimate rather than know the true value of a company's internal capabilities, widening stock return distributions under uncertainty. This evidence suggests that regulatory authorities and exchange governors in Indonesia should consider implementing enhanced reporting standards that explicitly capture the intellectual asset bases of listed industrial corporations to protect market stability.
Author Profiles
Atika Rahmi, M.B.A. (Corresponding Author) is a senior lecturer and financial researcher at Universitas Muhammadiyah Bekasi Karawang. Her academic expertise centers on corporate finance, digital business management, and quantitative market models.
Raisya Puspa Septiani, M.Sc. is a financial scholar at Universitas Muhammadiyah Bekasi Karawang. Her research focuses on investor behavior, corporate governance frameworks, and stock exchange risk metrics.
Ria Fitria Andriani, M.Acc. is an accounting and corporate valuation specialist at Universitas Muhammadiyah Bekasi Karawang. Her research portfolio spans asset pricing, corporate performance measurement, and accounting information systems.
Source
Atika Rahmi, Raisya Puspa Septiani, Ria Fitria Andriani. Exploring the Impact of EVA, Capital Gearing, and Intellectual Capital on Systematic Risk: The Mediating Role of Corporate Value. Journal of Finance and Business Digital (JFBD). Vol. 5 No. 2, 187-202
DOI:
URL: https://journaljfbd.my.id/index.php/jfbd
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