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Determinants of capital structure decisions in Indonesia
Authors: Nirmadarningsih Hiya; Isfenti Sadalia; Khaira Amalia Fachruddin
Number of views: 245
The aims of this study are to examine the effect of return on equity (ROE), current ratios
(CR), tangibility, non-debt tax shields (NDTS) and growth opportunities (GO) on the debt to
equity ratio of the Indonesian Stock Exchange Manufacturing Sector. This study uses data
analysis techniques with multiple linear regression models using a panel data analysis
mechanism. The object of this research is manufacturing companies listed in Indonesia Stock
Exchange with a span of observational studies is from 2008 - 2012. The sampling technique used
was purposive sampling technique. In testing multiple regression models using panel data
analysis used a statistical software tool namely E-views series 4. Panel data testing was carried
out in 3 tests, namely Pooled Least Squared (PLS) Test, Fixed Effect Model (FEM) and Random
Effect Model (REM)
The results of the sample selection are based on 88 companies from the total of 125
companies. Every data from this research is collected from the sources of the Indonesian Capital
Market Directory (ICMD). Multiple regression testing begins with testing the estimation
of Pooled Least Square (PLS) and Fixed Effect Model (FEM) and the results of the Chow-Test
test stated that FEM is better than PLS. Also, Random Effect Model (REM) testing and Hausman
showed that REM is a better model in analyzing this research data, so that this study is no longer
testing classical assumptions.
Based on the results of the tests conducted, the results show that the research model
formed from the independent variable return on equity (ROE), current ratio (CR), tangibility,
non-debt tax shields (NDTS) and growth opportunities (GO) affected the debt to equity ratio
(DER) in the manufacturing sector of companies listed on the Indonesia Stock Exchange in the
period 2008 to 2012. Also, partially variable which has a significant effect and in accordance
with the theory is only the ROE variable where the variable has a negative effect.