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Analysis of the Influence of Assets Structure, Earning Volatility, and Financial Flexibility on Capital Structure and Corporate Performance in Manufacturing Sector Companies on the IDX

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  • Muhammd Istan

Abstract

Companies play a crucial role in improving a country's economy by providing jobs for many people. To enhance their performance in a competitive market, it is important for companies, particularly manufacturing firms, to pay attention to their capital structure and corporate performance. This has prompted the researcher to analyze the effect of asset structure, earning volatility, and financial flexibility on capital structure and corporate performance in manufacturing sector companies listed on the Indonesia Stock Exchange (IDX). The objective of the study was to examine the impact of asset structure, earning volatility, and financial flexibility on capital structure and corporate performance in manufacturing sector companies listed on the Indonesia Stock Exchange (IDX). The research method employed in the study was descriptive quantitative. The data for the study were collected from financial reports of 58 companies using purposive sampling. The collected data were then analyzed using SPSS. The results of the analysis indicated that asset structure, financial flexibility, and earning volatility had a positive and significant influence on both capital structure and corporate performance. The influence value for capital structure was found to be 96.9%, while the influence value for corporate performance was 94.8%. This study suggests that optimizing asset structure, managing income volatility, and enhancing financial flexibility are crucial for manufacturing companies to improve capital structure and corporate performance.

Suggested Citation

  • Muhammd Istan, 2024. "Analysis of the Influence of Assets Structure, Earning Volatility, and Financial Flexibility on Capital Structure and Corporate Performance in Manufacturing Sector Companies on the IDX," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 49-65.
    • Handle: RePEc:bas:econst:y:2024:i:1:p:49-65
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    More about this item

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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