Determinants of Capital Structure and their Implications Toward Financial Performance of Construction Service Companies in Indonesia Stock Exchange (IDX)
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Keywords

The size of the firm, Asset utilization, Corporate growth, Liquidity, Asset tangibility, Capital structure.

How to Cite

Hakim, L. ., & Kasenda, F. . (2018). Determinants of Capital Structure and their Implications Toward Financial Performance of Construction Service Companies in Indonesia Stock Exchange (IDX). International Journal of Asian Social Science, 8(8), 528–533. https://doi.org/10.18488/journal.1.2018.88.528.533

Abstract

The purpose of this research are to know the influence of size of the firm, asset utilization, corporate growth, liquidity, asset tangibility, and capital structure on financial performance. The methods of this research used two model. Model I examine the effect of Corporate Size, Asset Utilization, Company Growth Potential, Liquidity, Asset Tangibility to Capital Structure. The proof of this model is done by using Model Panel Data. Based on Hausman's Test, the results show that p-value is greater than 5%, so it can be concluded that Random Effect Model is better to use. Model II examines the effect of Capital Structure, Company Size, Asset Utilization, Company Growth Potential, Liquidity, Asset Tangibility to Financial Performance. The proof of this model is done by using Model Panel Data. The Fixed Effect model is the selected model, since the random effect estimation can not be executed since E-views requires the number of individuals (cross section) to be larger than the coefficient including the intercept. The finding of this research is the size of the firm, asset utilization, corporate growth, liquidity, asset tangibility and capital structure simultaneous have a significant effect on financial performance. The most dominant variable of influence are capital structure and liquidity. The value of R2 is 0.768, which means that firm size, asset utilization, corporate growth, liquidity, asset tangibility and capital structure are together able to explain 76.8 percent variation of financial performance.

https://doi.org/10.18488/journal.1.2018.88.528.533
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