Effect of Business Risk, Company Size, and Asset Structure on Capital Structure with Profitability as an Intervening Variable (Case Study on Manufacturing Companies on the Indonesia Stock Exchange)

Abstract

The purpose of this study was to determine and analyze the effect of business risk, company size, and asset structure on capital structure with profitability as an intervening variable (case study on Manufacturing Companies on the Indonesia Stock Exchange). The population in this study are all Manufacturing Companies listed on the Indonesia Stock Exchange for the 2015-2019 period. Based on the purposive sampling method, 71 companies were obtained as samples. The data analysis technique used the partial least square (PLS) approach. PLS is a component-based or variant-based structural equation model (SEM). The results of the analysis show that business risk, company size, and asset structure have a significant effect on profitability. Business risk, company size and asset structure have a significant effect on capital structure. Profitability has no significant effect on capital structure. Profitability cannot mediate the effect of business risk, company size, and asset structure on capital structure. Keywords: Business Risk, Company Size, Asset Structure, Capital Structure, Profitability.