CAPITAL STRUCTURE IN ENERGY COMPANIES

Abstract

The purpose of this study is to investigate the influence of Capital Structure on the Growth of Energy Companies in Indonesia and China, with emphasis on energy company specific and financial aspects during 2014-2016. This study first from the capital structure and firm Growth value to discuss the research both at home and abroad, secondly the study of relevant theory from a macroeconomic conditions (GDP Growth rate, plus rate) Profitability Quality (ROE) and Liquidity Quality (Current ratio) comprehensive induction and comparison analysis, to facilitate the reader to understand the status of the research and development of the related theory This study is focused on the Growth of energy companies in Indonesia and China. Therefore, this study emphasis on one (1) main research question: ‘What is the influence of capital structure toward energy companies’ growth’? Moreover, this study investigates the influence of 2 independent variables from macroeconomic aspects, which are GDP growth rate, Inflation rate; and another 2 independent variables to represent financial aspects, such as current ratio, return on equity (ROE) towards capital structure. The research methodology is panel data general least square (GLS) by STATA M-64. The findings of this research is current ratio, return on equity (ROE) are significantly influence the capital structure. Moreover, this study shows that GDP growth rate and inflation rate has positive influence towards the capital structure. It means in the energy industry, return on equity, current ratio has negative influence toward its capital structure. Through this study, it shows that macroeconomic conditions has positive influence towards capital structure, there for this study recommends Energy Companies in Indonesia and China to consider the macroeconomic condition in order to gain the most efficient capital structure implementation.