Indonesia Conference Directory

Capital structure decisions are much influenced by firm specific factors, whereby these factors are supported by the existing Capital Structure Theory. This study aimed to look on how firm specific factors supporting the Pecking Order Theory from the 50 Biggest Market Capitalization of the Indonesia Stock Exchange for the period 2013-2018. These specific factors chosen were Tangibility Asset, Market to Book Ratio, Size, Profitability, and Liquidity. The results suggest that tangibility asset, profitability and liquidity were having negative relationship with the leverage, whereas market to book ratio were positively related to the leverage. Size did not appear to be significantly related to leverage. The results of this study supported The Pecking Order Theory. Another finding was an R square of 0.689 showed that specific factors have 68.9% effect on the companys leverage.