DETERMINANTS CAPITAL STRUCTURE: AN EMPIRICAL STUDY OF INDONESIAN TEXTILE MANUFACTURERS

Sunita Dasman

Abstract


Purpose - The aim of this empirical study is to investigate the factors that affect to capital structure of textile manufacturers. Design/Methodolygy/Approach – Trade-off theory and pecking order theory are adopted to formulate deterniants of capital structure of textiles industry. The investigation is performed using panel data procedures for a sample of 17 textile industries listed on the Indonesia Stock Exchange. Findings: The result suggest that profitability, liquidity, business risk, and asset structure have positive significant to leverage, whereas firm size has positive significant to the leverage. The relationsheep between growth opportunities and the leverage are not significant. Practical implications – This study has constructed some groundwork to investigate of capital structure of Indonesian textile manufacturers. The finding also could support corporate managers to make optimal capital structure. Originality/Value – To the author‘s knowledge, this is the first study that investigate the determinant of capital structure of Indonesian textile manufacturers by employing the recent data.

Keywords


Capital structure

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