The Effect of Capital Structure on Share Prices in The Consumption Industry Listed on The Indonesia Stock Exchange

Abstract

The formulation of the problem in this research is the extent to which the influence of the capital structure as measured by Debt to Equity Ratio (DER), Debt to Asset Ratio (DAR) and the Interest Coverage Ratio (ICR) empirically to the stock price. The purpose of this study is to investigate and analyze the effect of capital structure as measured by Debt to Equity Ratio (DER), Debt to Asset Ratio (DAR) and the Interest Coverage Ratio (ICR) empirically to the stock price. The hypothesis of this research is capital structure as measured by Debt to Equity Ratio (DER), Debt to Asset Ratio (DAR) and the Interest Coverage Ratio (ICR) effect on stock price. This research is a kind of causal research and are replicating the previous study with the study population are manufacturing companies listed on the Stock Exchange during the period 2009-2011. Sample selection is done by purposive sampling method and from 50 manufacturing companies acquired 30 companies sampled. The data used are secondary data. This study analyzes the relationship between the effects of capital structure as measured by Debt to Equity Ratio (DER), Debt to Asset Ratio (DAR) and the Interest Coverage Ratio (ICR) empirically to the stock price. The statistical method used was multiple linear regression with the classic assumption test first. The results of this study indicate that the simultaneous capital structure as measured by Debt to Equity Ratio (DER), Debt to Asset Ratio (DAR) and the Interest Coverage Ratio (ICR) effect on stock price. Tests showed only partial variable Interest Coverage Ratio (ICR) that significantly influence stock prices.