CAPITAL STRUCTURE VARIABLES OF PECKING ORDER THEORY PERSPECTIVE IN INDONESIA STOCK EXCHANGE

The purpose of study was to analyze variables that determine capital structure of non-financial companies in Indonesia based on pecking order theory. There are five variables observed namely, profitability, firm size, asset growth, asset structure, and liquidity. The population were non-financial companies listed on Indonesia Stock Exchange during 2010-2016 and published annual financial statements in 2009-2016. This study used census technique. Population consisted of 280 companies. Study used secondary data were data of annual financial statements during 2009-2016. Data obtained from BEI website and Indonesian Capital Market Directory. This study used multiple regression models for panel data to predict relationship between independent and dependent variables. Result showed that profitability, firm size, and asset structure had significant effect on capital structure. Other variables namely asset growth and liquidity had non-significant effect on capital structure. Study concluded that profitability is the determinant variable of capital structure on non-financial firms in Indonesia based on pecking order theory approach. The study also found that another capital structure determinant variable namely firm size and asset structure tends to follow trade-off theory.