The Role of Tangibility, Business Risk, and Managerial Ownership on Capital Structure

A survey by the Ministry of Manpower of the Republic of Indonesia revealed that 88% of enterprises experienced financial distress during the COVID-19 pandemic, highlighting the importance of effective capital structure management in times of crisis. This study aims to examine the factors influencing capital structure decisions among companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2022. Using a purposive sampling method, secondary data from company financial statements were analyzed through multiple regression analysis with EViews 12 software. The findings confirm that business risk has a significant negative effect on capital structure (p = 0.03), indicating that higher risk discourages debt financing. Additionally, asset tangibility moderates this relationship, strengthening the influence of business risk on capital structure. However, managerial ownership does not significantly impact capital structure (p = 0.7657), and no moderating effect of tangibility is found on the relationship between managerial ownership and capital structure. The study concludes that firms can better manage their financing strategies by accounting for business risks and the role of tangible assets, while the limited influence of managerial ownership may reflect its relatively low proportion in the sample firms.