International Journal of Economics, Commerce and Management United Kingdom Vol. IV, Issue 7, July 2016 Licensed under Creative Common Page 344 http://ijecm.co.uk/ ISSN 2348 0386 ROLE OF OWNERSHIP STRUCTURE IN THE EFFECT OF DIVERSIFICATION STRATEGY ON CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF COMPANIES LISTED IN INDONESIA STOCK EXCHANGE Wahyu Ari Andriyanto Doctorate Program in Management, Indonesia School of Economics, Surabaya, Indonesia andriyanto.wahyuari@gmail.com Budiyanto Doctorate Program in Management, Indonesia School of Economics, Surabaya, Indonesia Sutjipto Ngumar Doctorate Program in Management, Indonesia School of Economics, Surabaya, Indonesia Nur Fadjrih Asyik Doctorate Program in Management, Indonesia School of Economics, Surabaya, Indonesia Abstract This study aimed to examine the effect of the diversification strategy decisions on capital structure and financial performance and to examine the role of the ownership structure (institutional ownership and managerial ownership) on the effect of the diversification strategy on capital structure and company’s financial performance. Type of this research is quantitative research. The sample used is a non-financial company in accordance with the criteria and is registered as a public company in Indonesia Stock Exchange 2009-2014 period. This study classifies into four variables, are independent variables (exogeneous variable): related diversification strategy (X_1) and unrelated diversification strategies (X_2), moderating variables: institutional ownership (Z_1) and managerial ownership (Z_2), intervening variables: capital structure (Y_1), and the dependent variable (endogeneous variable): the company's