Determinants of Capital StructureStudy of Manufacturing Company Listed in Indonesia Stock Exchange

This research intends to analyze the determinants of capital structure, study of non�financial companies listed in Indonesia Stock Exchange. The variable of capital structure used in this study is long term debt-equity ratio and the possible determinants are firm size, firm growth, business risk, profitability, and tangibility. The multiple linear regression model is used by analyzing 117 firms listed in Indonesia Stock Exchange during the period of 2007 � 2009. The writer did classical assumption testing to make sure that the model is free from multicollinearity, autocorrelation, and heteroscedasticity. The test indicated that the OLS residuals of 117 firms or 351 observations are not normally distributed. Thus the model is transformed into log-log, or double log model, so several observations must be excluded from the model. 152 observations are omitted and left 192 observations of 99 manufacturing companies to be used for the model. The result of final regression analysis shows that firm size, firm growth, business risk, profitability, and tangibility have significant influence on debt-equity ratio (DER) either simultaneously or partially. The regression model can explain 31.6% of variance in the DER with error level of 0.00. Also, each of independent variables is able to affect DER significantly. The relationship between each independent variable is same as the writer�s expectation. There is another alternative result of final regression that is explained in Appendix 4. This alternative regression is conducted without considering normality assumptions. It also shows that simultaneously firm size, firm growth, business risk, profitability, and tangibility have significant influence on DER. But partially, only business risk and profitability have negative and statistically significant influence on DER at the 10% and 5% level, while the others do not