What Determines The Capital Structure of Property, Real Estate and Building Construction Companies? Evidence from Indonesian Listed Companies

Rini Setyo Witiastuti,Sari Fitri Fatimah

doi:10.15294/maj.v9i4.40634

Abstract

This research is intended to prove the influence of financial flexibility, asset structure, firm size, profitability and business risk on the capital structure. The population on this study are property, real estate and building construction sector that are listed on the Indonesia Stock Exchange in 2009-2018. The number of samples used were 28 companies with a purposive sampling method. The data studied was obtained from the Indonesia Stock Exchange (IDX). Methods of data analysis used in this study is multiple linear regression. The results showed that financial flexibility has not significant negative effect on capital structure. Asset structure and firm size have a significant positive effect on capital structure. The profitability and business risk have a significant negative effect on capital structure. Further research is needed to use another proxies such as ROE for profitability variables or standard deviations from ROE for business risk on capital structure and add another sectors or the number of observation periods.

Highlights

The company must be able to determine the cost of capital to fulfill their business
Based on the results of the t test in table 8, it can be seen that of the five independent variables in this study that were tested partially, it shows that there are three variables, namely the asset structure (TAN), firm size (SIZE), profitability (ROA) and business risk (BRISK) variable. ) has a probability value
The results show that financial flexibility has an insignificant negative effect on the decision making of the capital structure of property, real estate and building construction companies listed on the Indonesia Stock Exchange from 2009 to 2018, hypothesis 1 is rejected

Summary

Introduction

The company must be able to determine the cost of capital to fulfill their business. Capital structure is an important part of management because it shows the company’s financial condition. Based on the results of the t test, it can be seen that of the five independent variables in this study that were tested partially, it shows that there are three variables, namely the asset structure (TAN), firm size (SIZE), profitability (ROA) and business risk (BRISK) variable.

Results

Conclusion