Determinants of capital structure decisions in Indonesia
Determinants of capital structure decisions in Indonesia

Summary/Abstract: The aims of this study are to examine the effect of return on equity (ROE), current ratios(CR), tangibility, non-debt tax shields (NDTS) and growth opportunities (GO) on the debt toequity ratio of the Indonesian Stock Exchange Manufacturing Sector. This study uses dataanalysis techniques with multiple linear regression models using a panel data analysismechanism. The object of this research is manufacturing companies listed in Indonesia StockExchange with a span of observational studies is from 2008 - 2012. The sampling technique usedwas purposive sampling technique. In testing multiple regression models using panel dataanalysis used a statistical software tool namely E-views series 4. Panel data testing was carriedout in 3 tests, namely Pooled Least Squared (PLS) Test, Fixed Effect Model (FEM) and RandomEffect Model (REM)The results of the sample selection are based on 88 companies from the total of 125companies. Every data from this research is collected from the sources of the Indonesian CapitalMarket Directory (ICMD). Multiple regression testing begins with testing the estimationof Pooled Least Square (PLS) and Fixed Effect Model (FEM) and the results of the Chow-Testtest stated that FEM is better than PLS. Also, Random Effect Model (REM) testing and Hausmanshowed that REM is a better model in analyzing this research data, so that this study is no longertesting classical assumptions.Based on the results of the tests conducted, the results show that the research modelformed from the independent variable return on equity (ROE), current ratio (CR), tangibility,non-debt tax shields (NDTS) and growth opportunities (GO) affected the debt to equity ratio(DER) in the manufacturing sector of companies listed on the Indonesia Stock Exchange in theperiod 2008 to 2012. Also, partially variable which has a significant effect and in accordancewith the theory is only the ROE variable where the variable has a negative effect.

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