Research reveals debt type impacts capital structure decisions in Indonesian manufacturing firms, highlighting key factors like profitability and asset tangibility.
Key Points
Manufacturing firms in Indonesia prefer long-term debt for fixed assets and short-term debt for intangible investments.
Key determinants include profitability, firm size, asset tangibility, and market demand fluctuations affecting debt choices.
Structural equation modeling was used to analyze data from 58 firms over 580 firm-year observations from 2011 to 2023.
Findings suggest short-term debt plays a significant role in maintaining working capital amid market volatility.