THE INFLUENCE OF CHIEF EXECUTIVE OFFICER INDIVIDUAL  FACTORS ON CAPITAL STRUCTURE

Thomas Yulianto Prakoso; Putu Anom Mahadwartha; Arif Herlambang

doi:10.24123/jmb.v16i1.316

THE INFLUENCE OF CHIEF EXECUTIVE OFFICER INDIVIDUAL FACTORS ON CAPITAL STRUCTURE

Thomas Yulianto Prakoso⁽¹⁾, Putu Anom Mahadwartha⁽²⁾, Arif Herlambang^(3*),

(1) University of Surabaya
(2) University of Surabaya
(3) University of Surabaya
(*) Corresponding Author

Abstract

This study aims to analyze the effect of Chief Executive Officer (CEO) individual factor towards capital structure decision using Leverage as a dependend variable with Age (CEO Age), Tenure as independen variable amd Capex, ROA (Return on Asset), dan IO (Institutional Ownership) as control variable on LQ45 companies listed in Indonesia Stock Exchange (BEI) in the period 2012-2016. This research uses quantitative approach with single regression analysis model. This study uses sample of firms which are listed on LQ45 in IDX on 2012 - 2016. The number of final samples used in this study were 66 business entities with 330 observations. The study findings suggest that Age and ROA variables have negative and significant effect towards Leverage, while Tenure and IO variable have positive and significant effect towards Leverage. On the other hand, Capex variables does not indicate significant effect towards Leverage in LQ45 companies on the period 2012-2016.

Keywords

capital structure, age, tenure, leverage

Full Text:

PDF

References

Custodio, C., dan Metzger, D., 2013, Financial Expert CEOs: CEO’s Work Experience and Firm’s Financial Policies, Journal of Financial Economics, Vol. 114:121-158.

Chao, C. Chur., et al., 2017, The Impact of CEO Power on Corporate Capital Structure: New Evidence from Dynamic Panel Threshold Analysis, International Review of Economics and Finance, Vol 51.: 107-120.

Detthamrong, U., et al., 2017, Corporate Governance, Capital Structure and Firm Performance: Evidence from Thailand, Research in International Bussiness and Finance, Vol. 42: 689-709.

Mulyani, E., et al., 2016, Dividens, Leverage, and Family Ownership in the Emerging Indonesian Market, Journal of International Financial Markets, Institutions & Money, Vol 43: 16-29.

Ting, I.W.K., et al., 2015, Upper Echelon Theory Revisited: The Relationship Between CEO Personal Characteristics and Financial Leverage Decision, Proc. Social and Behavioral Sciences, Vol. 195: 686-694.

Celil, H.S., and Kim, D.S., 2014, Are CEOs Relevant to Capital Structure?, Working

Paper, Peking University.

Galizia, F., and Brien, D.O., 2001, Do Capital Expenditures Determine Debt Issues?,

Working Paper, European Investment Bank.

Herdinata, Christian., 2015, Interdependence Between Institutional Ownership and Leverage of Free Cash Flow: The Development of Agency Theory Model in Balancing Conflict of Interest in Indonesian Company, Mediterranean Journal of Social Sciences, Vol. 6 no 3.

Lemon, M.L., et al., 2008, Back to The Beginning: Persistence and The Cross Section of Corporate Capital Structure, The Journal of Finance, Vol. 63: 1575-1608.

Fama, E.F., 1980, Agency Problems and The Theory of The Firm, Journal of Political

Economy, vol. 11: 288-307.

Moh’d . M.A., et al., 1998, The Impact of Ownership Structure on Corporate Debt

Policiy: A Time Series Cross-Sectional Analysis, Finance Review, vol. 3: 85-99.

Susilawati, R.A.E., 2007, Pengaruh Kepemilikan Manajerial dan Kepemilikan Institusional Terhadap Kebijakan Hutang Perusahaan, Jurnal Ekonomi Modernisasi, Vol. 3 no. 2.

Megginson, W.L., 1997, Corporate Finance Theory, Addison-Wesley Educational

Pulisher Inc.

DOI: https://doi.org/10.24123/jmb.v16i1.316