DETERMINANTS OF CAPITAL STRUCTURE: Empirical Study of Consumer Goods Listing Firm in Indonesia Capital Market
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Date
2022
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Journal ISSN
Volume Title
Publisher
WIBEST-III
Abstract
Capital Structure is one of the most researched topics by academics and professionals
because it has a direct influence on the enterprise stock value. Many studies have
discussed the determinants of capital structure, but the results are still mixed. This
paper aims to determine factors affecting the capital structure of consumer goods
companies listed in the Indonesia capital market during 2016–2020. This research is a
type of applied research with a quantitative approach. This paper use panel data
regression with a random effect model to achieve the research goal with sample size
is 36 firms selecting by using the purposive sampling technique. The results show
that liquidity has a negative effect on the company's capital structure in the consumer
goods industry, meanwhile, firm growth and business risk have no effect on the
company's capital structure. This condition shows the relevance of the pecking order
hypothesis in explaining the determinants of the firm's capital structure in the
consumer goods industry.
Description
Keywords
Capital Structure, Liquidity, Firm Growth, Business Risk, Consumer Goods