The Effect of Corporate Governance on Indonesian Capital Structure

The purpose of this research is to test whether there is an influence of corporate governance characteristics (Board Size, Board Composition, Percentage of Managerial Ownership and Institutional Shareholding) on capital structure in Indonesian Firms, using five control variables: tangibility, profitability, growth opportunity, size and cash holding. This research uses the non-financial firms listed in the Indonesian Stock Exchange (IDX) at the period of 2000-2010 and uses panel data regression analysis method. The results show that in the period of 2000-2010, institutional shareholding, profitability, size and cash holding had a significant effect on capital structure (long term debt ratio in market values). On the whole, all of the independent variables had significant effect on capital structure