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Research Paper | Management | Indonesia | Volume 5 Issue 12, December 2016

The Effect of Financial Performance to Capital Structure of Indonesian Plantation Company in 2010-2015

Riza Pahlevi | Sri Hartoyo ^[9] | Tubagus Nur Ahmad Maulana ^[5]

Abstract: PTPN-V is an Indonesian plantation company which finance its operation from internal and external funding. The company utilized external fund for replanting investment activity and factory rehabilitation in 2010-2015. It is aimed to achive the companys vision and the best performance in next period. External funding will increase the cost and affect the company performance. Determination of the best funding based on the composition of capital structure will generate the maximum value of firm and minimum cost of capital. The purpose of this study is to analyze the impact of financial performance on capital structure using multiple regression method. The result of this study shows that variables which statistically significant in affecting capital structure are company size, company growth, tangibility, activity, and lag leverage. Company size, company growth, and lag leverage have positive impact on capital structure. Meanwhile, tangibility and activity have negative impact on capital structure.

Keywords: Capital structure, financial performance, plantation company, regression

Edition: Volume 5 Issue 12, December 2016,

Pages: 488 - 491

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