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How Maritime Connectivity & Crude Oil Price Determine Capital Structure of Maritime Industry in Indonesia
Nur Huda Salasa Majid (a*), Imo Gandakusuma (b)

(a) Faculty of Economics and business, Universitas Indonesia, Gedung Dekanat FEB UI Kampus Widjojo Nitisastro, Jl. Prof. DR. Sumitro Djojohadikusumo, Kukusan, Kecamatan Beji, Kota Depok, Jawa Barat 16424
(*) nur.huda01[at]ui.ac.id

(b) Faculty of Economics and business, Universitas Indonesia, Gedung Dekanat FEB UI Kampus Widjojo Nitisastro, Jl. Prof. DR. Sumitro Djojohadikusumo, Kukusan, Kecamatan Beji, Kota Depok, Jawa Barat 16424


Abstract

Purpose - Maritime industries dominates the world^s trade transportation mode because more than 90% of international trade volume is transported by sea. Indonesia as the biggest maritime country in the world has a big contribution to international trade volume. Investment decision are very important for the sustainability & competitiveness of the companies in this industry. This article shows several variables such as Oil Crude Price and maritime connectivity index have determined the capital structure of firms in maritime industry in Indonesia
Design/methodology - The research analysed 23 listed company in maritime industry in Indonesia between 2016-2020 using Ordinary Least Square and fix effect model.
Findings - The Study result in accordance to both Trade-Off Theory and Pecking Order Theory. It shows that financial leverage is negatively affected by return on asset, and positively affected by Tangibility, and operating cash flow. In addition, Oil Crude Price & Maritime Connectivity Index have strengthened and weaken the correlations between financial leverage and its independent variable such as return of asset, Tangibility and Operating Cash Flow.
Practical implications - These findings could help managers of the company to make a decision of their optimal capital structure based on those variables.
Originality/value - This study has focused on macro economical factor that affect in firms^ capital structure such as Crude Oil Price & Maritime Connectivity.
Conclusion - Companies in maritime industry in Indonesia have to be more focus on tangibility and profitability of the company to make an investment decision. Furthermore the results show that fluctuations of Crude Oil Price and maritime connectivity index also become factors to be consider to optimize the capital structure of the Companies.

Keywords: Capital Structure, Maritime Connectivity, Oil Crude Price, Maritime Industry, Investment Decision

Topic: Financial Management and Accounting

Plain Format | Corresponding Author (Nur Huda Salasa Majid)

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