Citation:

Shadrina Hazmi, Eno Casmi, Rina Dwiarti, Sri Handayani, Norlaili Binti Salleh Hudin. "Determinants of Capital Structure: Evidence in Indonesia and Malaysia" International Research Journal of Economics and Management Studies, Vol. 2, No. 4, pp. 539-545, 2023.

Abstract:

This research investigates the factors that influence a company’s capital structure. The panel data was obtained from all non-financial companies registered in Indonesia and Malaysia. The sampling technique used purposive sampling based on certain criteria. Based on the sampling method, 520 non-financial companies in Indonesia and Malaysia were obtained for the 2019-2022 period. The data obtained was 2080 data taken from Osiris. The research uses three estimation models, namely pooled least squares, fixed effect model, and random effect model. The profitability has a significant negative effect on the company’s capital structure. Growth Opportunities and Tangible assets have a significant positive effect on the company’s capital structure. While Size, Non-debt tax shield, Tax, and business risk do not affect the company’s capital structure. The results of this research support the application of trade-off theory in developing countries, especially in Indonesia and Malaysia.

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Keywords:

Capital Structure, Profitability, Company Size, Non-Debt Tax Shield, Growth Opportunities, Tax Expense.