Wayan Sutarka, the Student of Faculty of Economics, Sriwijaya University, Palembang, Indonesia

e–mail: wnsutarka@gmail.com

Isnurhadi, Ph.D. (Economics), Faculty of Economics, Sriwijaya University, Palembang, Indonesia

e–mail: isnurhadi2020@gmail.com

Yuliani, Doctor of Economics, Faculty of Economics, Sriwijaya University, Palembang, Indonesia

ORCID ID: 0000-0003-3488-7941
e-mail: yulianisyapril@gmail.com

Agustina Hanafi, Doctor of Economics, Faculty of Economics, Sriwijaya University, Palembang, Indonesia

e-mail: tinahanafi@ymail.com

The Determinants of Capital Structure of Listed Retailing Sector Companies on Indonesia Stock Exchange (IDX)

Abstract. Introduction. Capital structure must be the concern of the company’s financial managers in expanding and financing the company’s operations. The financing decisions that will be used must have strong implications for the value of the company in the future. The data used in this study were secondary data obtained from the Indonesia Stock Exchange website and from the HOTS PT application. Mirae Aset Sekuritas as well as from the official website of each company in the researched samples. The researched population was listed retailing sector companies on the Indonesia Stock Exchange (IDX) over the period of 2012-2016. The number of companies used was 18. The data analysis used panel data regression on the fixed effect assumption.

Purpose. The purpose of this study was to conduct an analysis and obtain empirical evidence of the effect of the Profitability, Tangibility, Firm Size, Growth Opportunity, Liquidity, Business Risk and Non-Debt Tax Shield variables on the capital structure.

Results. The results of the study showed that the capital structure (leverage) was influenced by variables of profitability, firm size, liquidity and non debt tax shields (NDTS). Variables of assets tangibility, growth opportunity and business risk did not affect the leverage.

Conclusion. The company finance managers should prioritize the internal funding sources and need to be thoroughly in utilizing external funding. The results of the analysis showed that the Pecking Order (POT) theory was more influential than the Trade-Off (TOT) theory. Internal financing sources were preferred to avoid high loan interest rates in Indonesia, foreign exchange risk losses for loans in foreign currencies, government regulations that limit the amount of interest costs that can be charged as tax deduction fees and the Indonesian economy which is vulnerable to global influences.

Keywords: Capital Structure; Profitability; Tangibility; Firm Size; Growth opportunity; Liquidity; Business risk; Non Debt Tax Shields.

References:

1. Abdillah, N. Ikhsan, S. and Mutia, I. (2017). “Factors Affecting Structure of Go PublicManufacturing Companies in BEI (Indonesia Stock Exchange)”, International Journal of Accounting Research, vol. 6, iss 1, pp. 173. DOI: 10.4172/2472-114X.1000173.
2. Abdulla, Y. (2017). “Capital structure in a tax-free economy: evidence from UAE. International”, Journal of Islamic and Middle Eastern Finance and Management, 10, iss.1, pp. 102-116. DOI: 10.1108/IMEFM-11-2015-0144.
3. Al-Ajmi, J. Hussain, H. A. & Al-Saleh, N. (2009). “Decisions on Capital Structure ina Zakat Environment with prohibition of Riba”, Journal of Risk Finance, 10, no.5, pp. 460-476. DOI: https://doi.org/10.1108/15265940911001376
4. Alipour, M. Mohammadi, M.F.S and Derakhshan, H. (2015). “Determinants of capital structure: an empirical study of firms in Iran”, International Journal of Law and Management, vol. 57, no. 1, pp. 53-83. DOI: http://dx.doi.org/10.1108/IJLMA-01-2013-0004.
5. Al-Najjar, B. and Khaled Hussainey, (2011). “Revisiting The Capital-Structure Puzzle: UK Evidence”, The Journal of Risk Finance, vol. 12, no. 4, pp. 329-338. DOI: https://doi.org/10.1108/15265941111158505.
6. Al-Najjar, B. dan P. Taylor, (2008). “The relationship between capital structure and ownership structure new evidence from Jordanian panel data”, Managerial Finance, vol. 34, no. 12, pp. 919-933. DOI: https://doi.org/10.1108/03074350810915851
7. Amidu, M. (2007). “Determinants of CapitalStructure of Banks in Ghana: An Empirical Approach”, Baltic Journal of Management, vol. 2, no. 1, pp. 67-79. DOI: https://doi.org/10.1108/17465260710720255
8. Arifin, (2014). SPSS 24 Untuk Penelitian dan Skripsi (Cetakan Pertama). PT Elex Media Komputindo, Jakarta, Indonesia.
9. Ardalan, K. (2007). “Capital Structure Theory: Reconsidered”, Research in International Business and Finance, vol. 39, 3, pp. 696-710.
10. Audriene, (2016). “Sukses di Singapura dan Malaysia, Erajaya Bidik Negara Ketiga”, available at: https://www.cnnindonesia.com/ekonomi/20160609150544-92-136954/ (Accessed 01 December 2018).
11. Bandyopadhyay, A. and Barua, N. M. (2016). “Factors Determining Capital Structure and Corporate Performance in India: Studying the Business Cycle Effects”, The Quarterly Review of Economics and Finance, vol. 61, iss. C, pp. 160-172. DOI: https://doi.org/10.1016/j.qref.2016.01.004.
12. Baskoro, F. M. (2017). “Indonesia Masuk Lima Besar Sektor Ritel Paling Potensial di Dunia”, http://www.beritasatu.com/ekonomi/368786/, di akses 23 Mei 2017.
13. Basuki, T. and Nano, P. (2016). “Analisis Regresi Dalam Peneletian Ekonomi dan Bisnis (Dilengkapi Aplikasi SPSS & Eviews)”, Divisi Buku Perguruan Tinggi PT Rajagrafindo Persada, Jakarta, Indonesia.
14. Bradley, Jarrell, G. A. and Kim, E. (1984), “On the existence of optimal capital structure: Theory & Evidence”, Journal of Finance, vol. 39, no.3, pp.857-878. DOI: https://doi.org/10.1111/j.1540-6261.1984.tb03680.x
15. Chadha, S. and Sharma, A. K. (2015). “Determinants of Capital Structure: An Empirical Evaluation from India”, Journal of Advances inManagement Research, vol. 12, no. 1, pp. 3-14. DOI: https://doi.org/10.1108/JAMR-08-2014-0051.
16. Chen, J, C. Jiang dan Y. Lin (2014). “What determine firms’ capital structure in China”, Managerial Finance, vol. 40, iss 10, pp. 1024-1039. DOI: https://doi.org/10.1108/MF-06-2013-0163
17. Dao, Q. (2017). “Determinants of The Global Financial Crisis Recovery: An Empirical Assessment”, Journal of Economic Studies, vol. 44, iss. 1, pp. 36-46. DOI: https://doi.org/10.1108/JES-09-2015-0160.
18. Data Base (2017). Riset Tren Pertumbuhan Minimarket, Supermarket, Hypermarket 2015-2018, available at: http://www.Industri.com/ (Accessed 01 December 2018).
19. Dawar, (2014). “Agency Theory, Capital Structure and Firm Performance: Some Indian Evidence”, Managerial Finance, vol. 40, iss 12, pp. 1190-1206. DOI: https://doi.org/10.1108/MF-10-2013-0275
20. Dugan, T. Medcalfe, S. K. and Park, S. H. (2018). “A Reconsideration of perating- Financial Leverage Tradeoff Hypothesis”, Journal of Financial Economic Policy, vol. 10, iss. 4, pp. 473-483. DOI: https://doi.org/10.1108/JFEP-01-2018-0005.
21. Fahmi, (2014). Manajemen Keuangan Perusahaan dan Pasar Modal, Mitra Wacana Media, Jakarta, Indonesia.
22. Ferdinand, (2017). Metode Penelitian Manajemen (Edisi Kelima), Badan Penerbit Universitas Diponogoro, Semarang, Indonesia.
23. Florentina, I. E. (2010). “Interdependensi Antara Insider Ownership, Keputusan Investasi dan Risiko Bisnis”, Jurnal Keuangandan Perbankan, vol. 17, no.1, pp. 50–60.
24. Glover, J. and Hambusch, G. (2013). “The Trade-Off Theory Revisited: On The Effect Of Operating Leverage”, International Journal of Managerial Finance, vol. 10, no. 1, 2014, pp. 2-22.
25. Gomez, G., Rivas, A. M. and Bolanos, E.R.L. (2014). “The Determinants of CapitalStructure in Peru”, Academia Revista Latino Americana de Administraciόn, vol. 27, iss 3, pp. 341-354. DOI: https://doi.org/10.1108/ARLA-01-2014-0007.
26. Hakim, (2014). Pengantar Ekonometrika dengan Aplikasi Eviews (Cetakan Pertama), Ekonisia, Yogyakarta, Indonesia.
27. Hamidah (2014). “Analysis Of Factors Affecting The Capital Structure And Profitability in Indonesian’S Manufacturing Company Year 2009 – 2013”, Tesis Universitas Negeri Jakarta, Jurnal Keuangan dan Perbankan, vol. 20, no. 2, pp.157–165.
28. Haron, (2016). “Do Indonesian firms practice target capital structure a dynamic approach”, Journal of Asia Business Studies, vol. 10, iss 3, pp. 318-334. DOI: https://doi.org/10.1108/JABS-07-2015-0100
29. Husnan, Dan, E. and Pudjiastuti (2015). “Dasar-Dasar Manajemen Keuangan (Edisi Ketujuh)”, UPP STIM YKPN, Yogyakarta, Indonesia.
30. Irianto, (2015). “Statistik Konsep Dasar, Aplikasi, dan Pengembangannya (Edisi Keempat)”, Prenadamedia Group, Jakarta, Indonesia.
31. Jager, (2008). “Panel data techniques and accounting research”, Meditari Accountancy Research, vol. 16, iss 2, pp. 53 -68. DOI: https://doi.org/10.1108/10222529200800012
32. Karadeniz, E. S.Y. Kandir, M. B. and Onal, Y. B. (2009). “Determinants of capital structure: evidence from Turkish lodging companies”, International Journal of Contemporary Hospitality Management, vol. 21, no. 5, pp. 594-609. DOI: https://doi.org/10.1108/09596110910967827.
33. Kellermann, K. and Schlag, C. (2013). “Occupy risk weighting: howthe minimum leverage ratiodominates capital requirements A Swiss example”, Journal of Financial Regulation andCompliance, vol. 21, no. 4, pp. 353-372.
34. Komara A. S. Hartoyo dan T. Andati. (2014). “Analisis Pengaruh Struktur Modal Terhadap Kinerja Keuangan Perusahaan”, Jurnal KeuangandanPerbankan, vol. 20, no.1, pp. 10-21.
35. Kumar, (2017). “Research On Capital Structure Determinants: A Review And Future Directions”, International Journal of Managerial Finance, vol. 13, iss 2, pp. 106-132. DOI: https://doi.org/10.1108/IJMF-09-2014-0135.
36. Li, H. and Stathis, P. (2017). “Determinants Of Capital Structure In Australia: An Analysisof Important Factors”, Managerial Finance, vol. 43, 8, pp. 881-897. DOI: https://doi.org/10.1108/MF-02-2017-0030.
37. Liang, J. Li, L. F. and Song, H. (2007). “An Explanation of Capital Structure of China’s Listed Property Firms”, Property Management, vol. 32, no. 1, pp. 4-15. DOI: https://doi.org/10.1108/PM-02-2013-0012.
38. Morri, G. and Beretta, C. (2008). “The capital structure determinants of REITs. Is it a peculiar industry”, Journal of European Real Estate Research, vol. 1, no. 1, pp. 6-57. DOI: https://doi.org/10.1108/17539260810891488.
39. Myers, S. C. (1984). “The capital structure puzzle”, Journal of Finance, vol. 39, no. 3, pp. 575-92. DOI: https://doi.org/10.2307/2327916.
40. Myers, S. C. and Majluf, N. S. (1984). “Corporate financing and investment decisions when firm shave information that investors do not have”, Journal of Financial Economics, vol. 13, no. 2, pp. 187-221. DOI: https://doi.org/10.1016/0304-405X(84)90023-0.
41. Peraturan Presiden Republik Indonesia Nomor 112, Tahun 2007 Tentang Penataan Dan Pembinaan Pasar Tradisional, Pusat Perbelanjaan Dan Toko Modern, www.hukumonline.com, di akses 10 Januari 2018.
42. Pohan, A. “Alfamart semakin eksis di Filipina”, available at: https://industri.kontan.co.id/news/ (Accessed 01 December 2018).
43. Pramesti, (2016). “Statistik Lengkap Secara Teori dan Aplikasi dengan SPSS 23”, Kompas Gramedia, Jakarta, Indonesia.
44. Priyatno, (2017). Panduan Praktis Olah Data Menggunakan SPSS. Penerbit Andi (Anggota IKAPI), Yogyakarta, Indonesia.
45. Quan,D.H. (2002). “A Rational Justification of The Pecking Order Hypothesis to The Choice of Sources of Financing”, Management Research News, vol. 25, iss 12, pp. 74-90. DOI: https://doi.org/10.1108/01409170210783296.
46. Ramjee, A. and Gwatidzo, T. (2012). “Dynamics in capital structure determinants in South Africa Meditari”, Accountancy Research, vol. 20, no. 1, pp. 52-67.
47. Su, K. R. and Landan, B. (2013). “Ultimate ownership, institutionality, and capital structure: Empirical analyses of Chinese data Chinese”, Management Studies, vol. 7, no. 4, pp. 557-571
48. Thippayana, P. (2014). “Determinants of Capital Structure in Thailand”, Procedia – Social and Behavioral Sciences”, vol. 143, pp. 1074-1077. DOI: https://doi.org/10.1016/j.sbspro.2014.07.558.
49. Vasiliou, D. Eriotis, N. and Daskalakis, N. (2009). “Testing the pecking order theory: the importance of methodology”, Qualitative Research in Financial Markets, 1, no. 2, pp. 85-96. DOI: https://doi.org/10.1108/17554170910975900.
50. Vo, X. V. (2017). “Determinants of capital structure in emerging markets: Evidence from Vietnam”, Research in International Business and Finance, 40, iss. C, pp. 105-113. DOI: https://doi.org/10.1016/j.ribaf.2016.12.001.
51. Wellalage, N. H. and Locke, S. (2015). ”Impact of ownership structure on capital structure of New Zealand unlisted firms”, Journal of Small Business and Enterprise Development, vol. 22, iss 1, pp. 127-142. DOI: https://doi.org/10.1108/JSBED-09-2011-0004.
52. Yuliani, R. H. Umrie and Diah, M. (2014). “Determinan Struktur Modal dan Pengaruhnya Terhadap Nilai Perusahaan pada Pasar yang Sedang Berkembang (Studi pada Sektor Real Estate and Property)”, Jurnal Manajemen Usahawan Indonesia, vol. 43 (1), pp. 27-52.
53. Zhang, D. and Liu, D. (2017). “Determinants of The Capital Structure of Chinese Non-Listed Enterprises: Is TFP efficient”, Economic Systems, vol. 41, iss. 2, 179-202. DOI: https://doi.org/10.1016/j.ecosys.2016.12.003.