Empirical Evidence of Capital Structure in Indonesia

Abstract

Capital structure is part of the use of corporate debt and capital that is used to fund a company's operational activities. The determination of capital structure needs to be completed to determine the optimal capital structure in order to maximise the value of a company. The research examines the effects of asset structure, profitability, firm size, business risk and asset growth on capital structure in the mining, agriculture, and food and beverage sectors. The sampling method used is purposive sampling with a criterion of companies that do not do mergers or acquisitions. The results of the study consider the overall capital structure policy by profitability and business risk. In the mining sector, asset structure, profitability and business risks affect the capital structure, while the size of the company and the growth of the company do not. In the agricultural sector, capital structure is issued by structure, profitability, company size, business risk and company growth. In the food and beverage sector, the structure, profitability and business risks affect the capital structure, while the size of the company and company growth do not.