CORPORATE GOVERNANCE AND CAPITAL STRUCTURE: EMPIRICAL EVIDENCE ON INDONESIA Ahmad Fadlur Rahman Bayuny
Departement of Islamic Economics, Universitas Airlangga
Abstract
Purposes: The purpose of this study is to examine the relationship between firm-specific characteristics, shariah index and corporate governance on the capital structure of Indonesian firms.
Methods: This research is quantitative based research. By using Method of Moments (GMM), This study will use sample of all companies listed in IDX in all sector except financial sector, for the period 2007-2020.
Results: The results showed that the Corporate governance variable such as Director Size, Independent Director, Commissionair size and Female Commisionaire could not contribute to the Capital Structure of the firms, Meanwhile, Female Director and Independent Commissionaire contribute negatively to the dependent variable. Shariah index and government ownership variable appears to have a positive influence to capital structure. For specific characteristics of the Firms Size and Tobins^q appears to have a negative influence toward the dependent variables, whereas Non Debt Tax Shield, Business Risk, ROA, ROE, EBIT to total asset ratio positively influence the capital structure of the firms.
Conclusion and suggestion: This study tries to present a portrait the relationship between firm-specific characteristics, shariah index and corporate governance on the capital structure of Indonesian firms so that the results of the study can be a recommendation for the government and policy makers to pay attention to firms characteristics and corporate governance setting in regards to capital structure. It may assist the government to establish more comprehensive corporate governance policy and regulations.
Keywords: Corporate Governance, Capital Structure, Firm Specific Characteristics, Shariah Index
