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The Effect of Capital Structure, Liquidity, and Company Size towards Profitability

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  • Joy Pandapotan
  • Noegrahini Lastiningsih

Abstract

This study aims to determine the effect of capital structure, liquidity, and company size on profitability in state-owned companies listed on the Indonesian state-owned enterprise website in 2016 - 2018. This research uses a quantitative approach. This study uses secondary data from company financial and annual report, the sample consists of 65 stated-owned companies. The data analysis technique in this study uses multiple linear regression, classic assumption test, and the hypothesis test consists of the t-test. Based on the results of data analysis known that capital structure has a insignificant negative effect on profitability, liquidity has a significant positive effect on profitability, and company size has a significant negative effect on profitability. The results of this study are expected to be useful for managers in making decisions related to company management, beneficial for investors in choosing investments, and being useful as a reference for further researchers who studying profitability variables

Suggested Citation

  • Joy Pandapotan & Noegrahini Lastiningsih, 2020. "The Effect of Capital Structure, Liquidity, and Company Size towards Profitability," Journal of Economics and Behavioral Studies, AMH International, vol. 12(4), pages 59-66.
    • Handle: RePEc:rnd:arjebs:v:12:y:2020:i:4:p:59-66
    DOI: 10.22610/jebs.v12i4(J).3060
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    References listed on IDEAS

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    1. Joshua Abor, 2005. "The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana," Journal of Risk Finance, Emerald Group Publishing, vol. 6(5), pages 438-445, November.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Dwi Kartikasari & Marisa Merianti, 2016. "The Effect of Leverage and Firm Size to Profitability of Public Manufacturing Companies in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 409-413.
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