The Determinants of Capital Structures in Automotive and Component Industries as Listed in IDX (Indonesia Stock Exchange)

Abstract

This study was conducted to determine the determinants of capital structure in the automotive industry and components, and provide the evidence of whether the capital structure influences the company value. The study was done on 12 automotive companies and components as listed Indonesia Stock Exchange (IDX) from 2008 to 2017. The data analysis using logistic regression and different tests. The results of this study indicate that the determinants of capital structure in the automotive industry and components are profitability and sales growth. The research result also prove that there is no different firm value between the company with high debts funding and low debts funding structures. This gives empirical support totrade off theory from Modigliani and Miller.