Analysis of the Influence of Asset Structure, Earnings Volatility, and Financial Flexibility on Capital Structure in Infrastructure Sector Companies Listed on the Indonesia Stock Exchange (Ekopedia Jurnal Ilmiah Ekonomi)

Summary

• The study uses panel data regression on 43 IDX-listed infrastructure companies and 129 observations for 2022-2024, with a Fixed Effect Model selected.p.1
• Asset structure has a negative but insignificant effect on capital structure, earnings volatility a significant negative effect, and financial flexibility a positive but insignificant effect.p.1
• The Fixed Effect Model has an R² of 0.8916.p.10
• Earnings volatility has a coefficient of -0.0127 (probability 0.0036); asset structure (0.2742) and financial flexibility (0.2576) are not significant.p.11
• The population consists of 67 infrastructure companies listed on the IDX.p.7
• Infrastructure budget allocation was projected to reach IDR 453.5 trillion in 2024.p.9

Key insights

1. Higher earnings volatility is associated with lower use of debt, supporting a partial Pecking Order Theory explanation.p.12
2. A one standard deviation rise in earnings volatility (5.9248) is followed by a fall in capital structure of only about 0.0755.p.12
3. The Durbin-Watson statistic of 3.1072 indicates negative autocorrelation, a limitation for significance tests.p.10
4. Capital structure (debt to total assets) has a mean of 2.9335 and a standard deviation of 3.5797.p.9
5. About 17% of funds raised through shares and debt in 2019 came from infrastructure, utilities and transportation.p.3