by Tita Deitiana*, Mira Komalasari

Trisakti School Of Management, Indonesia

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Abstract The purpose of this research are to test and analyze empirically the influence of profitability, liquidity, firm size, business risk,  growth opportunities, asset structure and tax shield toward capital structure. This research was also to improve the previous research. Sector basic industry and chemical can the effect capital structure if the higher of debt ratio than the higher risk on the company. Trade- off is between Risk and Return that became most important on the company make a decision. In this case that relationship with effect profitability, liquidity, firm size, business risk, growth opportunities, asset structure and tax shield to debt ratio that relationship with Trade off theory and Pecking Order Theory. Sample used in this research is manufacture companies, sector basic industry and chemical listed in Indonesia Stock Exchange over the 8 years period 2007-2014. The purposive sampling is used as sampling technique to obtain 17 companies met the criteria and were analyzed using descriptive statistics and multiple regression with random effect model for panel data were performed to test the hypotheses. The empirical evidence from this study shows that profitability and liquidity influence capital structure, while firm size, business risk, growth opportunities, asset structure and tax shield do not influence to capital structure. In addition, overall the independent variables influence capital structure simultaneously.

Keywords: Profitability, liquidity, firm size, business risk, growth opportunities, asset structure, tax shield, capital structure

Updated:: 11/04/2022 [syazmer]