THE CAPITAL STRUCTURES OF SMALL AND MEDIUM COMPANIES IN INDONESIA

Abstract

Small and medium companies play an important role in the economic development of any country. This study aims to explore the determinants of capital structure in small and medium companies in Indonesia. The company's capital structure will be influenced by microeconomic and macroeconomic conditions. Purposive sampling conducted in this study generated 15 samples. Data panel analysis was used to analyze small and medium companies in the listed period of 2011-2016. Results of the analysis show that size and profit positively affect the company's capital structure, while other variables do not show significant effects. In average, the small and medium companies in Indonesia have conservative capital structures and positive profits. It is good for the companies to keep their capital structure to stay at a conservative level and continue to improve the company's profitability.