Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)


Financial Performance Impact On Capital Structure in Indonesian Listed Company

Author(s): Syam Widia, Anindya Ardiansari and Andi Ramadhan

This study aims to examine the effect of profitability, asset structure, and liquidity on the capital structure of various industrial sector companies listed on the Indonesia Stock Exchange in the 2015-2018 using the pecking order theory approach. The population in this study were 48 companies in total, all various listed industry sector companies. After selecting with special criteria, the sample in this study amounted to 38 companies. The authors used Debt Equity Ratio (DER) for representing the capital structure. Profitability is proxied by Return on Equity (ROE), meanwhile in measuring asset structure, the authors used Fixed Asset to Total Assets (FATA). For liquidity ratio is proxied by Current Ratio (CR). The researchers used the coefficient of determination (R2) and partial regression tests (t-test) to analyze the relationship between financial performance and capital structure. Data processing techniques in this study using Eviews-9. The results show that profitability has a significant positive effect on capital structure, liquidity has a significant negative effect on capital structure, and asset structure has a negative and insignificant effect on capital structure. From this result, only in terms of liquidity variable, shows that Industrial sector companies public listed in the 2015-2018 applied the pecking order theory approach.

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