THE INFLUENCE OF CAPITAL STRUCTURE TO THE FIRM PERFORMANCE OF MANUFACTURING INDUSTRY PUBLIC COMPANIES LISTED IN INDONESIA STOCK EXCHANGE

Abstract

This research purposed to examine the influence of capital structure to the firm performance of Manufacturing Companies registered in the IDX. The population amounted to all 238 companies in September, 2021. Moreover, the sample used is 24 companies from 14 sub-sectors for the period of 2014 to 2021 with 192 total observation data. Quantitative technique is applied as the method; the data being used is secondary data which gathered from IDX and each company’s website. There are four independent variables namely DAR, DER, LDCE, EAR, and two controlling variables namely AGE and TANG will be tested in order to generate evidence whether those variables have relationships toward the ROA as dependent variable. This research aimed to discover the results of descriptive statistics analysis, classical assumption test, panel data regression model, and multiple regression analysis. Furthermore, the hypotheses will be tested using T-test to find the partial influences, and F-test to find the simultaneous influences of independent and controlling variables toward dependent variable. Among independent variables, DER, LDCE, AGE, and TANG have negative influences toward ROA. Meanwhile, DAR and EAR, have positive effects toward ROA. Furthermore, all variables have weakly explained ROA which amounted to 24.42 percent.