Determinants of Capital Structure of Consumer Goods Industry Sector Companies
Evidence from the Indonesian Stock Exchange
DOI:
https://doi.org/10.60036/jbm.653Keywords:
Capital Structure, Manufacturing, Consumer Goods Industry, Macroeconomic Variable, Indonesian Stock ExchangeAbstract
This research is motivated by the discrepancies and inconsistencies observed in prior investigations. This study aims to investigate the factors that influence the capital structure of firms in Indonesia. We employed the purposive sampling strategy to acquire 36 companies. The employed analytical technique is multiple linear regression with SmartPLS 4. This study reveals an inverse correlation between capital structure and profitability, as well as asset growth, the current ratio, and GDP. Conversely, capital structure exhibits a positive correlation with earnings volatility, asset tangibility, firm age, firm size, asset composition, inflation rate, and interest rate. We anticipate that future research will reassess the application of the same variables and those that exert no influence in our study. This research is limited to the consumer goods sector, and it is hoped that future research will consider other sectors. We advise prospective authors to use a 5% significance level and increase the sample size, whereas this study employs a 10% significance level. The findings of this study contribute to the accounting literature, particularly in the area of capital structure, and can serve as a reference for firm management to identify factors influencing capital structure. The results will enable firm management to enhance organisational performance and secure the company's viability.
Downloads
References
Abor, J., & Biekpe, N. (2009). How do we explain the capital structure of SMEs in sub‐Saharan Africa? Evidence from Ghana. Journal of Economic Studies, 36(1), 83–97.
Alipour, M., Mohammadi, M. F. S., & Derakhshan, H. (2015). Determinants of capital structure: an empirical study of firms in Iran. International Journal of Law and Management, 57(1), 53–83. https://doi.org/10.1108/IJLMA-01-2013-0004
Amidu, M. (2007). Determinants of capital structure of banks in Ghana: an empirical approach. Baltic Journal of Management, 2(1), 67–79.
Aulia, H., Al Ashry, L., & Fitra, H. (2019). Effect of sales growth and asset structure on capital structure in real estate and property companies on the Indonesia stock Exchange. 1st International Conference on Education Social Sciences and Humanities (ICESSHum 2019), 22–31.
Baker, M. P., & Wurgler, J. (2002). Why are dividends disappearing? An empirical analysis.
Baker, M., & Wurgler, J. (2002). Market timing and capital structure. Journal of Finance, 57(1), 1–32. https://doi.org/10.1111/1540-6261.00414
Bayrakdaroglu, A., Ege, I., & Yazici, N. (2013). A panel data analysis of capital structure determinants: Empirical results from Turkish capital market. International Journal of Economics and Finance, 5(4), 131–140.
Berger, A. N., Saunders, A., Scalise, J. M., & Udell, G. F. (1994). The effects of bank mergers and acquisitions on small business lending. Journal of Financial Economics, 50(2), 187–229.
Booth, L., Aivazian, V., Demirguc‐Kunt, A., & Maksimovic, V. (2001). Capital Structures in Developing Countries. Journal of Finance, 56(1), 87–130. https://econpapers.repec.org/RePEc:bla:jfinan:v:56:y:2001:i:1:p:87-130
Brounen, D., De Jong, A., & Koedijk, K. (2006). Capital structure policies in Europe: Survey evidence. Journal of Banking & Finance, 30(5), 1409–1442.
Budiono, B., & Septiani, N. (2017). Pengaruh inflasi, suku bunga SBI, kurs US dollar terhadap rupiah, pajak, solvabilitas, dan profitabilitas terhadap struktur modal pada perusahaan Lq-45 yang terdaftar di bursa efek Indonesia periode 2010-2015. BISMA (Bisnis Dan Manajemen), 9(2), 119–134.
Candra, Y. D., & Ambarwati. (2023). Pengaruh Inflasi , Suku Bunga dan Profitabilitas Terhadap Struktur Modal pada Perusahaan Property dan Real Estate. Journal o UKMC National Seminar on Accounting, 2(1), 576–588. https://journal.ukmc.ac.id/index.php/pnsoa/article/view/913
Cekrezi, A. (2013). Impact Of Firm Specific Factors On Capital Structure Decision: An Empirical Study Of Albanian Firms. European Journal of Sustainable Development, 2(4), 135.
Chadha, S., & Sharma, A. K. (2015). Determinants of capital structure: an empirical evaluation from India. Journal of Advances in Management Research, 12(1), 3–14.
Chaklader, B., & Chawla, D. (2016). A study of determinants of capital structure through panel data analysis of firms listed in NSE CNX 500. Vision, 20(4), 267–277.
Chandra, T. (2014). Faktor-faktor yang memengaruhi struktur modal pada perusahaan properti dan real estate di Indonesia. EKUITAS (Jurnal Ekonomi Dan Keuangan), 18(4), 507–523.
Chaudry, S. N., Iqbal, S., & Butt, M. (2015). Dividend policy, stock price volatility & firm size moderation: Investigation of bird in hand theory in Pakistan. Research Journal of Finance and Accounting, 6(23), 16–19.
Christy, V., & Sufiyati, S. (2023). Pengaruh Ukuran Perusahaan, Umur Perusahaan, Profitabilitas, Solvabilitas, Dan Pertumbuhan Penjualan Terhadap Nilai Perusahaan. Jurnal Paradigma Akuntansi, 5(3), 1345–1355. https://doi.org/10.24912/jpa.v5i3.25249
Ebel Ezeoha, A. (2008). Firm size and corporate financial‐leverage choice in a developing economy: Evidence from Nigeria. The Journal of Risk Finance, 9(4), 351–364.
Eldomiaty, T. I. (2008). Determinants of corporate capital structure: evidence from an emerging economy. International Journal of Commerce and Management, 17(1/2), 25–43.
Eldomiaty, T. I., & Azim, M. H. (2008). The dynamics of capital structure and heterogeneous systematic risk classes in Egypt. International Journal of Emerging Markets, 3(1), 7–37.
Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: which factors are reliably important? Financial Management, 38(1), 1–37.
Gharaibeh, O. K., & Saqer, A.-T. (2020). Determinants of capital structure: evidence from Jordanian service companies. Investment Management & Financial Innovations, 17(2), 364.
Graham, J. R., Leary, M. T., & Roberts, M. R. (2015). A century of capital structure: The leveraging of corporate America. Journal of Financial Economics, 118(3), 658–683.
Gropp, R., & Heider, F. (2010). The determinants of bank capital structure. Review of Finance, 14(4), 587–622.
Harris, C., & Roark, S. (2019). Cash flow risk and capital structure decisions. Finance Research Letters, 29, 393–397.
Howe, J. S. (1997). The Determination of Financial Structure: The Incentive-Signalling Approach. CFA Digest, 27(1), 5–7. https://doi.org/10.2469/dig.v27.n1.2
Husein, A. M., Arsyal, M., Sinaga, S., & Syahputa, H. (2019). Generative adversarial networks time series models to forecast medicine daily sales in hospital. Sinkron: Jurnal Dan Penelitian Teknik Informatika, 3(2), 112–118.
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323–329.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/https://doi.org/10.1016/0304-405X(76)90026-X
Kahya, E. H., Ersen, H. Y., Ekinci, C., Taş, O., & Simsek, K. D. (2020). Determinants of capital structure for firms in an Islamic equity index: comparing developed and developing countries. Journal of Capital Markets Studies, 4(2), 167–191. https://doi.org/10.1108/JCMS-07-2020-0023
Khan, S., Bashir, U., & Islam, M. S. (2021). Determinants of capital structure of banks: evidence from the Kingdom of Saudi Arabia. International Journal of Islamic and Middle Eastern Finance and Management, 14(2), 268–285.
Kumar, B., Manrai, A. K., & Manrai, L. A. (2017). Purchasing behaviour for environmentally sustainable products: A conceptual framework and empirical study. Journal of Retailing and Consumer Services, 34, 1–9.
Kusherlinawati, D. A., & Ardini, L. (2019). Pengaruh Ukuran Perusahaan Dan Pertumbuhan Aset Terhadap Struktur Modal. Jurnal Ilmu Dan Riset Akuntansi, 8(5), 1–17.
Leland, H. E., & Pyle, D. H. (1977). Informational asymmetries, financial structure, and financial intermediation. The Journal of Finance, 32(2), 371–387.
Low, P. Y., & Chen, K. H. (2004). Diversification and capital structure: Some international evidence. Review of Quantitative Finance and Accounting, 23, 55–71.
Memon, Z. A., Chen, Y., Tauni, M. Z., & Ali, H. (2018). The impact of cash flow volatility on firm leverage and debt maturity structure: evidence from China. China Finance Review International, 8(1), 69–91.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261–297.
Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: a correction. The American Economic Review, 53(3), 433–443.
Mufidah, A. (2012). Struktur Modal Perusahaan Properti dan Faktor-Faktor yang Mempengaruhinya. BISMA: Jurnal Bisnis Dan Manajemen, 6(1).
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.
Napa I, A., & Muljadi. (1995). Keputusan-Keputusan Keuangan Perusahaan: Teori dan Hasil Pengujian Empirik.
Putri, H. A. S. B. H. (2022). Pengaruh Ukuran Perusahaan, Profitabilitas, Dan Likuiditas Terhadap Struktur Modal Perusahaan Cosmetics Households. Jurnal Ilmu Dan Riset Manajemen, 11(3), 1–19.
Rafiee, S. M., & Neghabi, Z. H. (2013). An Investigation on Different Factors Influencing Growth of Banking Deposits. Management Science Letters, 4(1), 195–200. https://doi.org/10.5267/j.msl.2012.11.012
Ross, S. A. (1977). The determination of financial structure: the incentive-signalling approach. The Bell Journal of Economics, 23–40.
Saif-Alyousfi, A. Y. H., Md-Rus, R., Taufil-Mohd, K. N., Mohd Taib, H., & Shahar, H. K. (2020). Determinants of capital structure: evidence from Malaysian firms. Asia-Pacific Journal of Business Administration, 12(3–4), 283–326. https://doi.org/10.1108/APJBA-09-2019-0202
Septiana, V., & Gustyana, T. T. (2021). The influence of dividend policy, debt policy, profitability and firm age on firm value on cement subsectors listed on the IDX for the period 2015-2019. International Journal of Advanced Research in Economics and Finance, 3(1), 80–86.
Setiawati, P. S., & Wahidahwati, W. (2018). DETERMINAN STRUKTUR MODAL PADA SEKTOR INDUSTRI BARANG KONSUMSI. Jurnal Ilmu Dan Riset Akuntansi (JIRA), 7(3).
Sheikh, N. A., & Qureshi, M. A. (2017). Determinants of capital structure of Islamic and conventional commercial banks: Evidence from Pakistan. International Journal of Islamic and Middle Eastern Finance and Management, 10(1), 24–41.
Sheikh, N. A., & Wang, Z. (2011). Determinants of capital structure: An empirical study of firms in manufacturing industry of Pakistan. Managerial Finance, 37(2), 117–133.
Shoaib, K., & Yasushi, S. (2016). Ownership and capital structure of Pakistani non financial firms. Financial Internet Quarterly, 12(1), 57–67.
Sinem Kilic Celik. (2023). Potential Growth: A Global Database.
Skoogh, J., & Swärd, P. (2015). The Impact of Tangible Assets on Capital Structure-An analysis of Swedish listed companies.
Su, L. D. (2010). Ownership structure, corporate diversification and capital structure: Evidence from China’s publicly listed firms. Management Decision, 48(2), 314–339.
Suciati, W., Pardanawati, S. L., & Pravasanti, Y. A. (2022). Faktor-Faktor yang Mempengaruhi Struktur Modal Perusahaan. Jurnal Ilmiah Keuangan Akuntansi Bisnis, 1(2), 70–80. https://doi.org/10.53088/jikab.v1i2.10
Susanti, N., & Restiana, N. G. (2018). What’s the best factor to determining firm value. Jurnal Keuangan Dan Perbankan, 22(2), 301–309.
Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. The Journal of Finance, 43(1), 1–19.
Viviani, J. (2008). Capital structure determinants: an empirical study of French companies in the wine industry. International Journal of Wine Business Research, 20(2), 171–194.
Vo, X. V. (2017). Determinants of capital structure in emerging markets: Evidence from Vietnam. Research in International Business and Finance, 40, 105–113.
Yousef, I. (2019). The determinants of capital structure: evidence from GCC and UK real estate sectors. Real Estate Management and Valuation, 27(2), 108–125.
Yunietha, Y., & Palupi, A. (2017). Pengaruh corporate governance dan faktor lainnya terhadap manajemen laba perusahaan publik non keuangan. Jurnal Bisnis Dan Akuntansi, 19(1a-4), 292–303.
Zou, H., & Xiao, J. Z. (2006). The financing behaviour of listed Chinese firms. The British Accounting Review, 38(3), 239–258.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Lambok Nababan, Jhason Kristian Lee
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
