The DETERMINANTS OF CAPITAL STRUCTURE IN DEVELOPING COUNTRIES: A STUDY OF MANUFACTURING COMPANIES IN INDONESIA
DOI:
https://doi.org/10.37729/segmen.v22i2.7587Keywords:
Tangible Assets, Liquidity, Pecking Order Theory, Profitability, Capital Structure, Tangibility, Trade-Off Theory, Company SizeAbstract
This study aims to analyze the effect of firm size, profitability, tangible assets, liquidity, and growth on the capital structure of manufacturing companies listed on the Indonesia Stock Exchange for the 2020–2024 period. The dependent variable in this study is capital structure, while the independent variables include firm size, profitability, tangible assets, liquidity, and growth, and dividend policy as a control variable.
The sample in this study was 164 companies. Using panel data regression analysis with the Fixed Effect Model (FEM) approach adjusted using Weighted Least Squares (WLS), the results obtained were that firm size, liquidity, and growth had a positive effect on capital structure, while profitability and tangible assets had a negative effect on capital structure. Overall, the results of this study indicate that capital structure decisions are influenced by the company's internal characteristics and reflect the relevance of Trade-Off Theory and Pecking Order Theory in explaining corporate financing behavior.
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