The Effect of Tangibility, Profitability, and Firm Size on Financing Policy with Debt: Evidence from Companies in the Consumer Goods Industry
top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
crossref
doi
open access

Published: 17 November 2022

The Effect of Tangibility, Profitability, and Firm Size on Financing Policy with Debt: Evidence from Companies in the Consumer Goods Industry

Peter Peter, Herlina Herlina, Chintya Shanelie

Maranatha Christian University, Indonesia

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf

doi

10.31014/aior.1992.05.04.470

Pages: 205- 211

Keywords: Asset Structure, Financing Policy with Debt, Firm Size, Profitability

Abstract

This research is expected to check the influence of tangibility, profitability, and firm size on financing policy with debt. Moreover, to implement this purpose, this study employs the Indonesian-listed companies in the consumer goods industry between 2018 and 2020. Once calculating the sample size by the Slovin formula, twenty-one firms are obtained. Additionally, this study utilizes the probability of t-statistic for the related regression coefficients to examine hypotheses. After testing them, this study demonstrates that tangibility and company size positively affect the financing policy with debt; however, the more profits, the less debt to finance the assets.

References

  1. Alipour, M., Mohammadi, M. F. S., & Derakhshan, H. (2015). Determinants of capital structure: An empirical study of firms in Iran. International Journal of Law and Management, 57(1), 53–83. https://doi.org/10.1108/IJLMA-01-2013-0004

  2. Arilyn, E. J. (2019). The influence of firm age, tangibility, operating revenue, and depreciation ratio on the capital structure of automotive and component companies listed in the Indonesia Stock Exchange from 2007 to 2018. International Journal of Business, Economics, and Law, 19(1), 18–21. https://www.ijbel.com/wp-content/uploads/2019/09/ACC_60.pdf

  3. Azis, M. I., Juliana, A., Junaid, M. T., & Farisi, A. (2022). Affecting factors of stock price of the consumer goods companies in the Indonesian stock exchange. Akuisisi: Jurnal Akuntansi, 18(1), 1–12. http://dx.doi.org/10.24217

  4. Basri, M. F., Shoib, F. S., & Kamaralzaman, S. (2019). Determinants of capital structure: Evidence from Malaysian food and beverage firms. Research in World Economy, 10(5), 45–52. https://doi.org/10.5430/rwe.v10n5p45 Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principle of corporate finance (13th ed.). McGraw-Hill Education.

  5. Chadha, S., & Sharma, A. K. (2015). Determinants of capital structure: An empirical evaluation from India. Journal of Advances in Management Research, 12(1), 3–14. https://doi.org/10.1108/JAMR-08-2014-0051 

  6. Dakua, S. (2019). Effect of determinants on financial leverage in the Indian steel industry: A study on capital structure. International Journal of Finance and Economics, 24(1), 427–436. https://doi.org/10.1002/ijfe.1671

  7. Ghozali, I. (2021). Multivariate Analysis Application by IBM SPSS 26 (10th ed.). Badan Penerbit Universitas Diponegoro.

  8. Gitman, L. J., & Zutter, C. J. (2015). Principles of Managerial Finance (14th ed.). Pearson Education, Inc. Gujarati, D. N., Porter, D. C., & Pal, M. (2019). Basic Econometrics (6th ed.). McGraw-Hill Education. 

  9. Hadianto, B. (2015). The impact of the largest shareholder ownership on debt policy of the public listed firms in restaurant, hotel, and tourism industry: Evidence from Indonesia. International Journal of Education and Research, 3(5), 35–48. https://ijern.com/journal/2015/May-2015/04.pdf

  10. Handoo, A., & Sharma, K. (2014). A study on determinants of capital structure in India. IIMB Management Review, 26(3), 170–182. https://doi.org/10.1016/j.iimb.2014.07.009
    Hartono, J. (2017). Portfolio Theory and Investment Analysis (11th ed.). Badan Penerbit Fakultas Ekonomi Universitas Gadjah Mada.

  11. Husnan, S. (2015). Fundamental Portfolio Theory and Investment Analysis (5th ed.). UPP STIM YKPN.

  12. Imtiaz, M. F., Mahmud, K., & Mallik, A. (2016). Determinants of capital structure and testing of applicable theories: Evidence from pharmaceutical firms of Bangladesh. International Journal of Economics and Finance, 8(3), 23–32. https://doi.org/10.5539/ijef.v8n3p23

  13. Nachrowi, N. D., & Usman, H. (2006). The Popular and Practical Approach of Econometrics for Economics and Financial Analyses. Lembaga Penerbit Fakultas Ekonomi Universitas Indonesia.

  14. Nasimi, R. N., Nasimi, A. N., & Islam, W. (2018). Determinants of capital structure in Pakistan. European Journal of Business and Management, 9(4), 4623–4627. https://iiste.org/Journals/index.php/EJBM/article/view/45649/47131

  15. Nguyen, T. G., Nguyen, L., & Nguyen, T. D. (2021). Capital Structure and Its Determinants: Evidence from Vietnam. Journal of Asian Finance, Economics, and Business, 8(10), 1–10. https://doi.org/10.13106/jafeb.2021.vol8.no10.0001

  16. Prieto, A. B. T., & Lee, Y. (2019). Internal and external determinants of capital structure in large Korean firms. Global Business and Finance Review, 24(3), 79–96. https://doi.org/10.17549/gbfr.2019.24.3.79

  17. Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some Evidence from International Data. The Journal of Finance, 50(5), 1421–1460. https://doi.org/10.1111/j.1540-6261.1995.tb05184.x Saif-Alyousfi, A. Y. H., Md-Rus, R., Taufil-Mohd, K. N., Mohd Taib, H., &

  18. Shahar, H. K. (2020). Determinants of capital structure: evidence from Malaysian firms. Asia-Pacific Journal of Business Administration, 12(3–4), 283–326. https://doi.org/10.1108/APJBA-09-2019-0202

  19. Setiawan, C., & Yumeng, Q. (2021). The determinants of capital structure on the China-listed construction companies. Journal of Applied Accounting and Finance, 5(1), 1–15. https://doi.org/10.33021/jaaf.v5i1.1459 Suliyanto, S. (2009). Research Business Method. Penerbit Andi.

bottom of page