The Effect of Corporate Characteristics on Capital Structure in Indonesia

Abstract

This study aims to determine the effect of corporate characteristics on the company's capital structure, which plays a fundamental role in the proportion of debt and equity financing risks. The research method used is purposive sampling. This research's population is non-financial issuers listed on the Indonesia Stock Exchange with quarterly data for the period of 2010-2017. The analysis is performed using panel data with six independent variables and two control variables. The results of this study indicate that profitability and institutional ownership have a negative effect on capital structure. In contrast, market ratios, firm size, and managerial ownership have a positive effect on capital structure. Debt decision making must consider financial and ownership characteristics, especially if there is institutional or government ownership in the company because company characteristics have a significant effect on the company's capital structure.

Ownership Structure and Firm Value of Quoted Consumers Goods Firms in Nigeria

“…Lastly, the other factors that affect firm performance are firm size, leverage, and industry type (Kechi, 2011). Hence, ownership concentration is related to firm value since traditional theories argued that when ownership of a firm is concentrated in the hand of large shareholders, they have the incentive to monitor the managers' action through direct intervention to reduce agency problem (Chen & Swan, 2010;Albart et al, 2020). Also, in the studies of a diversification strategy, it was found that ownership concentration enhances corporate diversification and performance of a firm because it constitutes the largest investment in a corporate firm (Genc & Angelo 2012).…”

Capital Structure Adjustment Speed: Evidence From Indonesian Property, Real Estate, and Construction Building Firms

“…The first hypothesis testing of this study refers to the research of Albart et al (2020), where the dependent variable used is leverage with a proxy debt to equity ratio (Total Debt / Total Equity). The first independent variable in the first hypothesis test is profitability which is calculated by Earnings Before Interest and Taxes (EBIT) / Total Assets.…”

“…Furthermore, the Growth variable is the third independent variable in the first hypothesis test that we use the growth of company assets over time. The use of proxies on each of the independent variables to test the first hypothesis is based on the research of Mihalca (2011), Nosita (2012), Surwanti (2015, Mawitjere (2016), andAlbart et al (2020).…”

“…In contrast, the growth variable does not significantly influence the leverage variable. Research results from Albart et al (2020) also use the variables of profitability and firm size in testing the optimal capital structure of the company, where the variable profitability does not affect leverage while the variable firm size significantly has a positive influence on leverage.…”

Determinan Struktur Modal Pada Perusahaan Yang Terdaftar Di Jakarta Islamic Index

“…Penelitian terdahulu mengenai pengaruh ukuran perusahaan memiliki hasil yang beragam. Menurut Naser et al (2015); Gharaibeh (2015); Sumedrea (2015); Shah, Rashid, and Khaleequzzaman (2017); Akgul and Sigali (2018); Yildirim, Masih, and Bacha (2018); Iqbal, Ahmad, and Ali (2019); Albart et al (2020), bahwa ukuran perusahaan berpengaruh signifikan dan positif terhadap struktur modal. Sedangkan menurut Öztekin (2015); Wijayanti (2018) ukuran perusahaan hanya berpengaruh positif terhadap struktur modal.…”