Research Article
Determinants of Capital Structure and Financial Performance in Indonesian Manufacturing Company (Empirical Study on Companies Listed on the Indonesia Stock Exchange 2010 – 2019)
@INPROCEEDINGS{10.4108/eai.27-7-2021.2316871, author={Ruhmiyati Ruhmiyati and Eko Rizkianto}, title={Determinants of Capital Structure and Financial Performance in Indonesian Manufacturing Company (Empirical Study on Companies Listed on the Indonesia Stock Exchange 2010 -- 2019)}, proceedings={Proceedings of the 4th International Conference on Economics, Business and Economic Education Science, ICE-BEES 2021, 27-28 July 2021, Semarang, Indonesia}, publisher={EAI}, proceedings_a={ICE-BEES}, year={2022}, month={3}, keywords={capital structure financial performance panel data manufacturing companies}, doi={10.4108/eai.27-7-2021.2316871} }- Ruhmiyati Ruhmiyati
Eko Rizkianto
Year: 2022
Determinants of Capital Structure and Financial Performance in Indonesian Manufacturing Company (Empirical Study on Companies Listed on the Indonesia Stock Exchange 2010 – 2019)
ICE-BEES
EAI
DOI: 10.4108/eai.27-7-2021.2316871
Abstract
The financial decision for the study of corporate finance is one of the most essential and challenging selections. A range of decision-making criteria can influence the capital structure and financial success of a company. The purpose of this study is to assess the factors affecting the capital structure and financial performance of the Indonesia Stock Exchange (BEI) manufacturing companies between 2010 and 2019. What is interest-tax shield including as an independent variable is the peculiarity of this study. Although the trade-off theory implies that the tax shield has a direct impact on the structure of the capital of the company, these factors were employed only by few research. The study findings show that the corporate debt to equity ratios are significantly affected by depreciation tax shields, interest tax shields, bankruptcy risk and liabilities. In addition, the company's long-term debt-to-equity ratio is significantly affected in terms of asset tangibility, investment growth opportunities, depreciation tax shield, interest tax shield and bankruptcy risk. In contrast, total equity to debt ratio has a negative impact on Indonesian manufacturing enterprises' financial performance.