Open AccessTHE EFFECT OF THIN CAPITALIZATION RULE TO CORPORATE CAPITAL STRUCTURE IN INDONESIA
Author(s) -
Muhammad Rheza Ramadhan,
Riko Riandoko
Publication year - 2017
Publication title -
jurnal ilmiah manajemen bisnis dan inovasi universitas sam ratulangi
Language(s) - English
Resource type - Journals
eISSN - 2621-2331
pISSN - 2356-3966
DOI - 10.35794/jmbi.v4i3.17992
Subject(s) - debt to capital ratio , gearing ratio , capital structure , debt to equity ratio , equity capital markets , business , debt , leverage (statistics) , capitalization , debt ratio , equity (law) , equity ratio , cost of capital , debt service ratio , accounting , financial system , economics , finance , private equity , external debt , debt to gdp ratio , political science , statistics , mathematics , profit (economics) , demography , population , philosophy , law , linguistics , sociology , microeconomics , nonprobability sampling
This research finds the effect of thin capitalization rule implementation to corporate capital structure (debt and equity) in Indonesia. This study used leverage data in 2015 (before the implementation) and 2016 (after the implementation). The data was seperated with the leverage above 4:1 and below 4:1. The data was processed using paired sample t-test. Based on hand-collected sample of 76 publicity- listed indonesian firms for the 2015 and 2016 year, we found that the thin capitalization rule significantly affected corporate capital in both the sample with Debt to Equity Ratio above 4:1 and Debt to Equity Ratio below 4:1 and doesn’t significantly affected corporate debt in both the sample with Debt to Equity Ratio above 4:1 and Debt to Equity Ratio below 4:1.