IDEAS home Printed from https://ideas.repec.org/a/rbs/ijfbss/v9y2020i3id780.html

The Controlling of Ownership on the relationship between Financial Performance and Capital Structure in Indonesia

Author

Listed:
  • Nicko Albart
  • Bonar Marulitua Sinaga
  • Perdana Wahyu Santosa
  • Trias Andati

Abstract

The purpose of the study was to determine the determinants of the firms' capital structure concerning their maximum financial performance. To reach this aim, the data of the financial statements firms of Indonesia were used. As the first method, a Pearson correlation matrix was applied to determine a statistically significant correlation between capital structure indicator (debt-to-assets ratio) and financial performance and ownership of the firms. The analysis used the data panel multiple regression model to assess the effect of these independent and controlling variables on leverage. Some findings are that profitability has positive (ROA) and negative (ROE) effect on leverage. MBV and tangibility do not affect the capital structure, and firm size negatively impacts on it. In this panel analysis, it was confirmed that the managerial and institutional ownership impact on leverage negatively and positively, respectively. By decreasing the sales growth, the debt ratio entity rises, or they have a negative relationship. Based on these findings, it can be stated that financial performances influenced the capital structure.

Suggested Citation

  • Nicko Albart & Bonar Marulitua Sinaga & Perdana Wahyu Santosa & Trias Andati, 2020. "The Controlling of Ownership on the relationship between Financial Performance and Capital Structure in Indonesia," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 15-27, March.
    • Handle: RePEc:rbs:ijfbss:v:9:y:2020:i:3:id:780
    DOI: 10.20525/ijfbs.v9i3.780
    as

    Download full text from publisher

    File URL: https://ssbfnet.com/ojs/index.php/ijfbs/article/view/780
    File Function: Abstract page
    Download Restriction: no
    File URL: https://ssbfnet.com/ojs/index.php/ijfbs/article/download/780/613
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijfbs.v9i3.780?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zhang, Dongyang & Liu, Deqiang, 2017. "Determinants of the capital structure of Chinese non-listed enterprises: Is TFP efficient?," Economic Systems, Elsevier, vol. 41(2), pages 179-202.
    2. Natalia Mokhova & Marek Zinecker & Tomáš Meluzín, 2018. "Internal factors influencing the cost of equity capital," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 5(4), pages 827-845, June.
    3. Natalia Mokhova & Marek Zinecker & Tomáš Meluzín, 2018. "Internal factors influencing the cost of equity capital," Post-Print hal-01858341, HAL.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicko Albart & Bonar Marulitua Sinaga & Perdana Wahyu Santosa & Trias Andati, 2020. "The Controlling role of Ownership on Financial Performance and Capital Structure in Indonesia," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 15-27, July.
    2. Alex Borodin & Manuela Tvaronavičienė & Irina Vygodchikova & Andrey Kulikov & Marina Skuratova & Natalia Shchegolevatykh, 2021. "Improving the Development Technology of an Oil and Gas Company Using the Minimax Optimality Criterion," Energies, MDPI, vol. 14(11), pages 1-17, May.
    3. Ntuli, Sizwe Perfect & Nzuza, Zwelihle Wiseman & Mbambo, Mzwandile Atkins, 2024. "Factors Influencing Equity Financing within Government Entities in South Africa," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 15(1), pages 345-353, December.
    4. Omer Bagais & Khaled Aljaaidi & Abdulaziz Alothman, 2021. "An Empirical Investigation of the Associations of Short and Long Debt Policies with Economic Values of Energy Sector," International Journal of Energy Economics and Policy, International Journal of Energy Economics and Policy, vol. 11(1), pages 249-254.
    5. Natalia Konovalova & Aina Caplinska, 2021. "Financial Resources Management in Commercial Banks: Evidence From Latvia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 369-387, January.
    6. Zhang, Dongyang, 2020. "How do firms overcome financial constraint anxiety to survive in the market? Evidence from large manufacturing data," International Review of Financial Analysis, Elsevier, vol. 70(C).
    7. Ayodeji Michael Obadire & Vusani Moyo & Ntungufhadzeni Freddy Munzhelele, 2023. "An Empirical Analysis of the Dynamics Influencing Bank Capital Structure in Africa," IJFS, MDPI, vol. 11(4), pages 1-21, November.
    8. Zhang, Dongyang, 2021. "Is export tax rebate a quality signal to determine firms’ capital structure? A financial intermediation perspective," Research in International Business and Finance, Elsevier, vol. 55(C).
    9. Zhang, Wen & Yan, Shaoshan & Li, Jian & Tian, Xin & Yoshida, Taketoshi, 2022. "Credit risk prediction of SMEs in supply chain finance by fusing demographic and behavioral data," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    10. Zhang, Dongyang & Zheng, Wenping, 2022. "Does COVID-19 make the firms’ performance worse? Evidence from the Chinese listed companies," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 560-570.
    11. Georgios A. Savvakis & Dimitris Kenourgios & Theofanis Papageorgiou, 2021. "To EMU or not to EMU: Can TFP “provoke” the capital structure puzzle of SMEs?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2595-2611, April.
    12. Zhang, Dongyang, 2021. "Marketization, environmental regulation, and eco-friendly productivity: A Malmquist–Luenberger index for pollution emissions of large Chinese firms," Journal of Asian Economics, Elsevier, vol. 76(C).
    13. Zhang, Dongyang, 2021. "Does a designed financial system impact polluting firms’ employment? Evidence of an experimental economic policy," Finance Research Letters, Elsevier, vol. 38(C).
    14. Jing Wang & Zeyu Xing & Rui Zhang, 2023. "AI technology application and employee responsibility," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 10(1), pages 1-17, December.
    15. Cheng, Chen & Li, Siming & Han, Jiajun, 2022. "Origin matters: How does institution imprint affect family business TFP?," International Review of Financial Analysis, Elsevier, vol. 83(C).
    16. Xianpu Xu & Xiawan Li & Lin Zheng, 2022. "A Blessing or a Curse? Exploring the Impact of Environmental Regulation on China’s Regional Green Development from the Perspective of Governance Transformation," IJERPH, MDPI, vol. 19(3), pages 1-24, January.
    17. Zhang, Dongyang & Lucey, Brian M., 2022. "Sustainable behaviors and firm performance: The role of financial constraints’ alleviation," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 220-233.
    18. Tekalign Negash Kebede, 2024. "Firm-specific and country-level determinants of commercial banks capital structures: evidence from Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 13(1), pages 1-25, December.
    19. Jin, Youliang & Feng, Xuan & Zeng, Huixiang, 2025. "Does tax incentive improve corporate resilience?A quasi-natural experiment based on value-added tax retained rebate policy," International Economics, Elsevier, vol. 183(C).
    20. Liu, Xiaohan & Liu, Jianmin & Wu, Haitao & Hao, Yu, 2022. "Do tax reductions stimulate firm productivity? A quasi-natural experiment from China," Economic Systems, Elsevier, vol. 46(4).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijfbss:v:9:y:2020:i:3:id:780. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hasan Dincer (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.