ANALISA EFISIENSI PASAR MODAL BENTUK LEMAH PADA BURSA EFEK JAKARTA

Abstract

ABSTRACT Financing resource is very important to support firm activities. A number of theories have been proposed to explain the variation in debt ratios across firms. The theories suggest that firms select capital structures depending on attributes that determine the various costs and benefits associated with debt and equity financing. Financial managers often think of the firm’s debt-equity decision as a trade-off between interest tax shields and the costs of financial distress. This trade-off theory of capital structure recoqnizes that target debt ratios may vary from firm to firm. Companies with safe, tangible assets and plenty of taxable income to shield ought to have target ratios. Unprofitable companies with risky, intangible assets ought to rely primarily on equity financing. The objectives of this study was to examined the influence of tangibility, profitability, growth, non-debt tax shields, cash holding and firm size toward leverage among listed companies at the Bursa Efek Indonesia (BEI) within period of 2004through 2007. Sample was determined using purposive sampling method of 532 firm years listed companies at the Indonesian Stock Exchange. Approach used in this paper is regression analysis. The empirical results show that tangibility and non-debt tax shields have a positive significant relation with leverage, profitability has a negative relation with leverage but not significant, growth and cash holding have a negative significant relation with leverage. Keyword: tangibility, profitability, growth, non-debt tax shields, cash holding, firm size and leverage.