The Influence of Liquidity Toward Capital Structure
Abstract
Globalization and technological developments in the business world, both in the industry are growing rapidly. Most of the manufacturing companies use the debt as their capital structure which can be seen from the fluctuation of debt to equity (DER) ratio in 2014-2017. This research aims to examine the influence of liquidity toward capital structure in manufacturing companies listed on the Indonesia Stock Exchange for the 2014-2018 period, which are grouped by the company size. The multiple linear regression analysis is used to test the hypothesis. The results of this research indicate that liquidity has a negative influence toward leverage, reflects that the higher the liquidity of a company, the lower the level of leverage and vice versa. There is a consistency between large and small companies regarding the effect of liquidity on leverage. Capital structure for large and small companies still choose internal funds as the first choice.
Keywords : Capital Structure; Liquidity; Large Companies; Small Companies.
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References
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Brigham, E. F., & Houston, J. F. (2007). Fundamentals of Financial Management (Eleventh). Thomson South-Western. https://lccn.loc.gov/2018046370
Deesomsak, R., Paudyal, K., & Pescetto, G. (2004). The determinants of capital structure: Evidence from the Asia Pacific region. Journal of Multinational Financial Management, 14, 387–405. https://doi.org/10.1016/j.mulfin.2004.03.001
Dewiningrat, A. I., & Mustanda, I. K. (2020). Pengaruh Likuiditas, Profitabilitas, dan Pertumbuhan Aset Terhadap Struktur Modal. E-Jurnal Manajemen Unud, 2(3), 18–31. https://doi.org/10.32877/eb.v2i3.137
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Gujarati, D. N. (2004). Basic Econometrics (Fourth). McGraw-Hill.
Gunadhi, G. B. D., & Putra, I. M. P. D. (2019). Pengaruh Profitabilitas, Struktur Aset, Likuiditas, Dan Pertumbuhan Penjualan Terhadap Struktur Modal Perusahaan Makanan Dan Minuman. E-Jurnal Akuntansi, 28, 641. https://doi.org/10.24843/eja.2019.v28.i01.p25
Harc, M., & Sarlija, N. (2012). The Impact of Liquidity on The Capital Structure : a Case Study of Croatian Firms. Business Systems Research, 3(1), 30–36. https://doi.org/10.2478/v10305-012-0005-1
IDX Fact Book 2014. (2014).
IDX Fact Book 2018. (2018).
Jensen, C., & Meckling, H. (1976). Theory of The Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3, 305–360.
Lipson, M. L., & Mortal, S. (2009). Liquidity and capital structure. Journal of Financial Markets, 12, 611–644. https://doi.org/10.1016/j.finmar.2009.04.002
Martynova, M., & Renneboog, L. (2009). What Determines The Financing Decision in Corporate Takeovers : Cost of Capital , Agency Problems , or The Means of Payment ? Journal of Corporate Finance, 15(3), 290–315. https://doi.org/10.1016/j.jcorpfin.2008.12.004
Modigliani, F., & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. American Economic Association, 48(3), 261–297.
Morellec, E. (2001). Asset Liquidity, Capital Structure, and Secured Debt. Journal of Financial Economics, 61, 173–206.
Myers, S. C. (1984). The Capital Structure Puzzle. The Journal of Finance Journal, XXXIX(3), 575–591.
Myers, S. C. (2001). Capital Structure. Journal of Economics Perspectives, 15(2), 81–102.
Myers, S. C., & Rajan, R. G. (1998). The paradox of liquidity*. Quarterly Journal of Economics, August.
Nita Septiani, N. P., & Suaryana, I. G. N. A. (2018). Pengaruh Profitabilitas, Ukuran Perusahaan, Struktur Aset, Risiko Bisnis dan Likuiditas pada Struktur Modal. E-Jurnal Akuntansi, 22, 1682. https://doi.org/10.24843/eja.2018.v22.i03.p02
Statistik Perbankan Indonesia (Vol. 18, Issue 1). (2019).
Suherman, Resy Purnamasari, & Umi Mardiyanti. (2019). Pengaruh Struktur Aset, Likuiditas, dan Profitabilitas terhadap Struktur Modal Dimoderasi oleh Ukuran Perusahaan. Jurnal Ilmiah Manajemen, 9(2), 369–381. dx.doi.org/10.22441/mix.2019.v9i2.009
Titman, S., & Wessels, R. (1988). The Determinants of Capital Structure Choice. The Journal of Finance, 43(1), 1–19. https://doi.org/10.1111/j.1540-6261.1988.tb02585.x
Udomsirikul, P., Jumreornvong, S., & Jiraporn, P. (2011). Liquidity and Capital Structure: The Case of Thailand. Journal of Multinational Financial Management, 21, 106–117. https://doi.org/10.1016/j.mulfin.2010.12.008
Vo, X. V. (2017). Determinants of Capital Structure in Emerging Markets: Evidence from Vietnam. Research in International Business and Finance, 40, 105–113. https://doi.org/10.1016/j.ribaf.2016.12.001
Published
2021-11-28
How to Cite
PARAMITA, Astriyani Sandya; SUHARDJO, Yohanes; ASRI, Marwan.
The Influence of Liquidity Toward Capital Structure.
E-Jurnal Akuntansi, [S.l.], v. 31, n. 11, p. 2800-2811, nov. 2021.
ISSN 2302-8556.
Available at: <https://ojs.unud.ac.id/index.php/akuntansi/article/view/77016>. Date accessed: 19 nov. 2024.
doi: https://doi.org/10.24843/EJA.2021.v31.i11.p10.
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