Journal of Economics, Business, and Accountancy Ventura Vol. 23, No. 1, April – July 2020, pages 46 – 56 46 The Effect of Corporate Characteristics on Capital Structure in Indonesia Nicko Albart 1 *, Bonar Marulitua Sinaga 1 , Perdana Wahyu Santosa 2 , Trias Andati 1 1 School of Business IPB University, Bogor, Indonesia 2 YARSI University, Jakarta, Indonesia ARTICLE INFO Article history: Received 16 April 2020 Revised 30 July 2020 Accepted 31 July 2020 JEL Classification: E34; G32; L22 Key words: Capital structure, corporate characteristics, ownership, profitability, tangibility. DOI: 10.14414/jebav.v23i1.2153 ABSTRACT This study aims to determine the effect of corporate characteristics on the company's capital structure, which plays a fundamental role in the proportion of debt and equity financing risks. The research method used is purposive sampling. This research's population is non-financial issuers listed on the Indonesia Stock Exchange with quarterly data for the period of 2010-2017. The analysis is performed using panel data with six independent variables and two control variables. The results of this study indicate that profitability and institutional ownership have a negative effect on capital structure. In contrast, market ratios, firm size, and managerial ownership have a positive effect on capital structure. Debt decision making must consider financial and ownership characteristics, especially if there is institutional or government ownership in the company because company characteristics have a significant effect on the company's capital structure. ABSTRAK Penelitian ini bertujuan untuk mengetahui pengaruh karakteristik perusahaan terhadap struktur modal perusahaan yang memainkan peranan fundamental terkait dengan proporsi risiko pendanaan utang dan ekuitas. Metode penelitian yang digunakan dalam penelitian ini adalah purposive sampling dengan populasi emiten non-keuangan di Bursa Efek Indonesia dengan data triwulanan periode 2010-2017. Analisis menggunakan data panel dengan enam variabel independen dan dua variabel kontrol. Kesimpulan dari penelitian ini menunjukkan bahwa profitabilitas dan kepemilikan institusional berefek negatif terhadap struktur modal, sedangkan rasio pasar, ukuran perusahaan, dan kepemilikan manajerial berkorelasi positif dengan struktur modal. Implikasi: pengambilan keputusan utang perlu mempertimbangan karakteristik finansiall dan kepemilikan, terlebih jika terdapat kepemilikan institusi atau pemerintah, karena karakteristik perusahaan berpengaruh secara signifikan terhadap struktur modal perusahaan. 1. INTRODUCTION The rapid development of the Indonesian economy has placed higher pressure on the capital structure of Indonesian companies than it has on US-Western companies. Higher rise in the economy forces Indonesian companies to raise capital at the new rate needed to support sales growth in a growing economy. The growth in market capitalization of 22.4 percent and an increase in the number of shares of 11.4 percent, which was quite high from 2010 to 2017, indicate increasingly high capital market dynamics. This shows that the demand for capital, especially equity, continues to increase (Indonesia Stock Exchange, 2018). This equity is used to support business expansion strategies, massive capital expenditures, and leverage restructuring (Ross, Westerfield, & Jordan, 2013; Tan & Yang, 2016). Furthermore, according to Prieto & Lee (2019), an increase in demand for equity shows better company performance and has been responded positively by investors. The company's capital structure is a particular mixture of long-term debt and equity that the company uses to finance its operations. The choice of optimal capital that comes from internal and * Corresponding author, email address: albartnicko@gmail.com .