Firm Size as Moderator to Capital Structure-Its Determinants Relations

Abstract

Objective – Capital structure policy is a strategic decision related to the selection of funding sources. The best mixed of capital structure will produce a low cost of capital, which in turn can maximize the value of the company. This study aims to determine the effect of company size as a moderator on the relationship of capital structure and its determinant factors on manufacturing companies in Indonesia and Malaysia. Methodology – Data were collected from 40 manufacturing companies listed on the Indonesia Stock Exchange and 130 manufacturing companies listed on the Bursa Malaysia during 2008-2017. This study will analyze the determinants of capital structure consisting of liquidity, profitability, tangibility and efficiency as well as company size as a moderating variable. The research method uses panel data regression. Findings – The company size provides a moderating effect on the relationship between capital structure with liquidity, profitability, tangibility and efficiency, and this moderation effect is strengthened in large companies in Indonesia. Instead, this moderation effect is weakening for large companies in Malaysia Novelty – Research shows that the "modified pecking order" model is better able to explain the capital structure, policies of manufacturing companies in Indonesia and Malaysia compared to the traditional pecking order and trade off theory models. Type of Paper: Empirical Keywords: Capital Structure; Pecking Order Theory; Trade Off Theory; Manufacturing Company; Moderating Effect. Reference to this paper should be made as follows: Sari, M; Netti, S.N; Sulastri, S. 2019. Firm Size as Moderator to Capital Structure-Its Determinants Relations, J. Fin. Bank. Review 4 (3): 108–115 https://doi.org/10.35609/jfbr.2019.4.3(4) JEL Classification: G23, G30, G32.

The role of corporate social responsibility and government incentives in installing industrial wastewater treatment plants: SEM-ANN deep learning approach

“…Six, we have investigated the firm size as moderating factor. This concept is used in measuring Capital Structure-Its Determinants Relations 19 or dynamic capability perspective 20 . Last but not least, we have implied a dual-stage deep learning methodology to capture the linear and non-linear interaction between variables and rank the variables according to their importance.…”

“…Financial condition, employee headcount, and related factors are key components in determining the size of a firm. It has been revealed in many studies that firm size is a significant mediator in a different context at the firm level, such as 19 , 20 . The installation of a WWTP to treat industrial wastewater is a firm investment that will enhance its reputation and fulfil its social responsibility.…”

“…Recent studies are mainly focusing on the technologies of water treatment plants 11 – 16 , the impact of clean drinking water on children under the age of five 17 , and government priorities of rural electrification over clean drinking water 18 , diseases and dangers to people's health caused by polluted water 5 , potential hazards to the environment and human health involved with the reuse of wastewater for irrigation 10 , Health risks associated with wastewater 9 . In addition, a large number of studies have led researchers to conclude that company size is an important mediator in various settings at the firm level 19 , 20 . Still, the role of firm size as a moderator in intentions to install wastewater treatment plants (WWTPs) and treatment of contaminated industrial wastewater is unknown.…”

Analisis Determinan Capital Structure Dengan Firm Size Sebagai Variabel Moderasi

“…Profitability dengan capital structure dengan firm size sebagai variabel moderasi. (Sari et al, 2019) dan (Gunardi et al, 2020) mengatakan bahwa firm size memperkuat hubungan negatif antara profitability terhadap capital structure karena perusahaan besar cenderung menghasilkan profitabilitas yang tinggi sehingga dalam membiayai perusahaannya lebih mengutamakan penggunaan dana internalnya.…”

“…Firm size memperkuat hubungan negatif antara profitability terhadap capital structure (Sari et al, 2019), (Gunardi et al, 2020). Tetapi, (Khafid et al, 2020), (Anum, 2018) menemukan bahwa firm size tidak dapat memoderasi hubungan profitability terhadap capital structure.…”