The Controlling role of Ownership on Financial Performance and Capital Structure in Indonesia

Nicko Albart, Bonar Marulitua Sinaga, Perdana Wahyu Santosa and Trias Andati
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Nicko Albart: School of Business IPB University, Bogor, Indonesia
Bonar Marulitua Sinaga: School of Business IPB University, Bogor, Indonesia
Perdana Wahyu Santosa: School of Business IPB University, Bogor and YARSI University, Jakarta, Indonesia
Trias Andati: School of Business IPB University, Bogor, Indonesia

International Journal of Finance & Banking Studies, 2020, vol. 9, issue 3, 15-27

Abstract: The aim of the study was to determine the factors of the firms' capital structure concerning their maximum firm value. The data-set of the financial statements firms of of all sector in Indonesia were used. This study the data panel multiple regression model to assess the effect of these independent and controlling variables on leverage. Some results are that profitability has positive (ROA) and negative (ROE) effect on leverage. MBV and tangibility do not affect the capital structure, and firm size negatively impacts on it. In this panel analysis, it was confirmed that the managerial and institutional ownership impact on leverage negatively and positively, respectively. By decreasing the sales growth, the debt ratio entity rises, or they have a negative relationship. Based on these findings, management and other stakeholders were suggested to concern of financial performances and ownership that influenced the capital structure in Indonesia.

Keywords: Capital structure; Financial performance; Leverage; Ownership; Sales growth (search for similar items in EconPapers)
Date: 2020
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