Influence of Company Internal Factors and Macroeconomics on Capital Structure Moderated by Firm Size

Abstract

Aims: This study aims to determine the influence of internal company factors and macroeconomics on the capital structure of non-financial companies listed in the LQ-45 index on the Indonesia Stock Exchange. Study Design:  Companies listed in the LQ-45 index on the Indonesia Stock Exchange from 2018-2022. Place and Duration of Study: LQ-45 index on the Indonesia Stock Exchange and the population is 45 companies. Use purposive sampling the sample is 17 companies. Methodology: Using purposive sampling, researcher obtained 83 unbalance data panel. The test of the sample using descriptive statistic test, classical assumption test, and moderated regression test to test the hypothesis using SPSS 25. Results: The result showed that profitability positively and significantly affects capital structure. Liquidity has a negative and significant effect on capital structure. Tangibility has an insignificant positive impact on capital structure. Meanwhile, inflation and GDP have negative and insignificant effects on capital structure. Firm size significantly moderates the effect of profitability and liquidity on capital structure. Meanwhile, the firm size does not significantly moderate the tangibility,  inflation, and GDP effect on capital structure. Conclusion: Looking at the profitability variable, companies contained in the LQ-45 index tend to follow the trade-off theory. The company still considers the return on debt in funding operations and investments. Companies also tend to make profits as dividends to shareholders. The firm size is able to moderate the effect of profitability on capital structure significantly. Firm size can weaken the positive influence of profitability on the capital structure.