CAPITAL STRUCTURE DETERMINANTS AT THE FIRM AND MACROECONOMIC LEVEL OF LISTED COMPANIES IN INDONESIA STOCK EXCHANGE UNDER BUILDING CONSTRUCTION SUBSECTOR

• Main Author: Gabriel Tambuwun, Breenda
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/65130
• Institution: Institut Teknologi Bandung

This study investigates the determinants that influence a firm's decision on its capital structure, taking into account both firm-level and macroeconomic factors. In this study, a quantitative approach is used to examine 13 publicly traded companies in the building construction subsector of the Indonesia Stock Exchange over a period of five years (2016-2020). Capital structure in this study is represented by the total debt ratio. The empirical analysis found growth opportunity and firm size to be positively related with leverage among listed building construction firms in Indonesia, whereas free cash flows, interest rate, liquidity, and profitability were found to be negatively related with leverage. The remaining variables have no significant effect on the debt ratio of Indonesian publicly traded building construction firms. Furthermore, there is no prominent theoretical and empirical foundation on the topic of capital structure to date. In terms of growth opportunity, interest rate, and size, construction companies followed the static tradeoff theory, while in terms of free cash flows to the firm, liquidity, and profitability, they followed the pecking order theory. Capital structure is affected by variety of factors that differ among industries, countries, and timeframe.