Factors Affecting the Capital Structure of Automotive and Automotive Component Companies Listed on the Indonesia Stock Exchange, 2009–2015

Abstract

Appropriate capital structure decisions can increase a company’s value. Various theories, such as the trade-off theory, pecking order theory, quiet life hypothesis, charter value hypothesis, and signaling theory, explain how management makes these decisions. This study aims to examine the influence of profitability, liquidity, business risk, sales growth, and firm size on the capital structure of companies in the automotive and components subsector listed on the Indonesia Stock Exchange (IDX) for the period 2009–2015. The research sample consists of 12 companies selected using purposive sampling. The analysis method used is multiple regression. The results show that firm size, business risk, and liquidity influence capital structure, whereas sales growth and profitability do not influence the capital structure of automotive and component firms on the IDX during the 2009–2015 period.