The Influence of Macroeconomic Conditions on the Speed of Recovery of the Capital Structure of Companies: An Empirical Study on Manufacturing Companies in Indonesia

Pierdijono Hartono (), Nugraha Nugraha and Toni Heryana
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Pierdijono Hartono: Universitas Pendidikan Indonesia
Nugraha Nugraha: Universitas Pendidikan Indonesia
Toni Heryana: Universitas Pendidikan Indonesia

A chapter in Proceedings of the 8th Global Conference on Business, Management, and Entrepreneurship (GCBME 2023), 2024, pp 102-108 from Springer

Abstract: Abstract In the wake of the COVID-19 pandemic, which began in 2020-2021, the capital structures of companies underwent significant changes due to the decline in the macroeconomic environment, the restriction of company operational activities, and, in some cases, the cessation of operations altogether. As a result, the company’s capital was utilized to finance daily operational costs. To survive this challenging period, companies sought to reestablish their optimal capital structure. The speed at which a company recovers its capital structure (recovery speed) is of critical importance, as it plays a key role in determining whether the company can return to its pre-crisis performance level or even achieve a new, improved level of performance. This study examines the relationship between GDP, inflation, exchange rate, and interest rate and the recovery speed of the capital structure of manufacturing companies listed on the Indonesia Stock Exchange. Using a purposive sampling method, a sample of 167 manufacturing companies was selected for the period 2019-2021. The research method employed was a causal or explanatory approach with multiple regression analysis processed via the SPSS 27 application. The study’s findings indicate that GDP and interest rate have a partial influence on the recovery speed of the capital structure, but do not exert a significant influence when considered together.

Keywords: Capital Structure; Macroeconomic; Speed of Recovery (search for similar items in EconPapers)
Date: 2024
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DOI: 10.2991/978-94-6463-443-3_16

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