Abstract:

The determination of capital structure has been a focal point of finance research for over six decades, yet it remains a complex and controversial topic, particularly in emerging markets like Indonesia. This study seeks to address a key gap in the literature by examining the firm-specific factors such as profitability, tangibility, growth opportunities, liquidity, and business risk that influence capital structure decisions among Indonesian firms. Despite existing knowledge, limited empirical research specifically addresses the unique financial dynamics of Indonesian firms, many of which rely heavily on debt due to restricted access to equity markets and the prevalence of family-owned enterprises. This reliance on debt raises concerns about financial stability, particularly in light of risks underscored by the Global Financial Crisis of 2008. Using data from public companies listed on the Indonesian Stock Exchange between 2014 and 2023, this study employs panel data regression and multiple regression analysis to investigate these factors. The significance of this study extends beyond academic contribution, offering valuable insights into financial management, policymaking, and investment strategies. By clarifying how firm-specific factors influence capital structure, this research provides practical guidance for financial managers to develop effective financing strategies. Furthermore, it assists policymakers in creating a supportive regulatory environment for businesses and helps investors make informed decisions. Ultimately, this study enhancing financial literacy and stability within Indonesia's growing economy.