CAPITAL STRUCTURE DETERMINANTS OF PLANTATION SUB-SECTOR COMPANIES IN INDONESIA STOCK EXCHANGE PERIOD 2014 – 2018

DOI: 10.38035/DIJEFA Abstract: The purpose of this study is to analyze the factors that influence the Debt to Asset Ratio which is a proxy of Capital Structure as the dependent variable. The independent variables studied as determinants of Capital Structure (DAR) include Size (SIZE), Profitability (ROA), Asset Structure (SA), and Corporate Liquidity (CR) using regression model. The population in this study are plantation sub-sector companies listed on the Indonesia Stock Exchange for the period 2014 2018. The findings suggest that ROA negatively significant affect DAR, while SA positively significant affect DAR. On the other hand, both SIZE & CR have no significant relationship with DAR.


INTRODUCTION
The agricultural sector has an important role in the Indonesian economy with a contribution to Gross Domestic Product (GDP) reaching 12.81 percent or ranks third after processing and trade in 2018 (BPS, 2019). In addition to playing a role in the formation of GDP, the agricultural sector is also the business sector that absorbs the most labor in Indonesia. The following is a comparison chart of the four main employment sectors throughout 2011 -2018 which shows the dominance of the agricultural sector.  Source: IDX, processed by researchers (2019) Palm oil is the main commodity of plantation products in Indonesia which acts as a producer of foreign exchange besides oil and gas. As the world's largest producer and exporter of palm oil, in 2017 the foreign exchange contribution of palm oil commodity exports reached USD 20,724,000,000 or around Rp240 trillion, outperforming foreign exchange from other commodities (GAPKI, 2019).

Agency Theory
Agency theory is a theory put forward by Jensen & Meckling (1976) in their research entitled "Theory of the Firm: Managerial Behavior, Agency Cost and Ownership Structure". The theory explains the potential problems that arise, which are often referred to as agency relationships, when someone or more (the principal) employs another person (the agent) to carry out some activities on their behalf (the principal) which involve the delegation of authority in decision making by the agent. The agency relationship itself is an agreement in which one or more people (owners) are involved with another person (agent) to perform several services on their behalf, which entails entrusting some of the decision making power to the agent (Jensen and Meckling, 1976).

RESEARCH METHODS Types of research
This type of research is causality research, namely research that aims to test hypotheses and determine the relationship and influence between two or more variables on other variables. This study aims to examine the effect of independent variables, namely company size, profitability, asset structure and liquidity on the dependent variable, namely capital structure.

Operational Definition and Variable Measurement
This study uses two types of variables, namely the dependent variable and the independent variable. Capital Structure (Y) in this study is used as the dependent variable. Size (X 1 ), Profitability (X 2 ), Asset Structure (X 3 ), and Liquidity (X 4 ) as independent variables.

FINDINGS AND DISCUSSION
Plantation sub-sector companies dominate the issuers of the agricultural sector on the Indonesia Stock Exchange (IDX). Based on the research limitations, there are 15 issuers that meet the criteria of being listed on the IDX since the beginning of 2014 and consistently delivering financial reports until 2018.

Discussion
Based on the analysis of the results of the research described previously, this section describes the discussion to prove the hypothesis. The discussion was carried out by describing the strong influence between independent variables consisting of SIZE, ROA, SA and CR on DAR on plantation subsector companies listed on the Indonesia Stock Exchange during the period 2014 to 2018. Description of the strength of influence between variables then compared with empirical evidence that obtained in the field and theories that support the hypothesis. The following stages of the discussion are based on the path between the variables in the model.

Analysis of the Effect of Company Size on Capital Structure
T-test results of company size variables indicate that Company Size (SIZE) partially has no effect on DAR. These results are not in line with the hypothesis which states that company size is suspected to have a negative effect on Capital Structure proxied by DAR. The results showed that Company Size (SIZE) has not been taken into consideration in determining DAR, this is because the company's total assets are not the only factor that determines the company's capital structure. In carrying out its financing activities, the company will first use internal funds, then only use loans from external parties or offer shares to obtain capital.
The results of this study reinforce several previous studies, including Liem (2013), Hartoyo (2014) and Masnoon (2014). In contrast, the results of this study are not in line with research by Sheluntcova (2014), Acaravci (2014), Alipour (2015) and Wahab (2014) who state that CR has a negative effect on DAR.

Analysis of the Effect of Return on Assets (ROA) on DAR
T-test results of profitability variables (ROA) indicate that ROA partially has a negative effect on DAR. Thus, these results are in line with the hypothesis which states that profitability (ROA) is thought to have a negative effect on Capital Structure proxied by DAR. Its negative influence is supported by research data, for example between 2014 to 2018, in average LSIP has a ROA 6.9% with a debt to total asset ratio (DAR) of 17.9%, while in average UNSP which has a lower ROA of -5.3% has a higher DAR of 95.8%.
Increased profitability as indicated by ROA will further strengthen the company's capital structure. Generally, the better the company's capital structure, the less likely it is that the Company will seek external funding through bank debt or bond issuance. This is based on the Pecking Order Theory where investors will prioritize the use of internal funds owned by the company (Myers, 1984).
The results of this study reinforce several previous studies, including Sari (2017), Sheluntcova (2014), Alipour (2015), and Couto (2016). In contrast, the results of this study are not in line with Ting (2011) who state that CR has a positive effect on DAR.

Analysis of the Effect of Asset Structure on Capital Structure
The t test results of the Asset Structure variable (SA) indicate that SA partially has a positive effect on DAR. Its positive influence is supported by research data, for example between 2014 to 2018, in average LSIP has a SA 60.4% with a debt to total asset ratio (DAR) of 17.9%, while in average JAWA which has a higher SA of 90.5% has a higher DAR of 68.3%. Thus, these results are in line with the hypothesis which states that Asset Structure (SA) is thought to have a positive effect on Capital Structure proxied by DAR.
The results of this study reinforce several previous studies, including Alipour (2015), Yousefzadeh (2014), Pattweekongka (2014), Liem (2013), who stated that CR had a significant positive effect on DAR. In contrast, the results of this study are not in line with research by Couto (2016), Sheluntcova (2014), Bauer (2014) and Ting (2011) who state that CR has a negative effect on DAR.

Analysis of the Effect of Liquidity (CR) on DAR
Liquidity variable t test results indicate that the Current Ratio (CR) partially has no effect on the DAR. As such, these results are not in line with the hypothesis that liquidity proxied by Current Ratio (CR) is thought to have a positive effect on Capital Structure proxied by DAR. If the company's liquidity is in good condition, the Company will more easily obtain financing for its working capital needs so that the Company's capital structure tends to increase with a relatively low level of risk. With a low level of risk it will attract creditors and debt bond investors to provide funding to the company.
The results of this study reinforce several previous studies, including Alipour (2015) and Margaretha (2010), who stated that CR had no significant effect on DAR. In contrast, the results of this study are not in line with research by Couto (2016), Ridloah (2011) and Nugroho (2011) who state that CR has a positive effect on DAR neither Sheluntcova (2014), Pattweekongka (2014) and Serghiescu (2014) who state that CR has a negative effect on DAR.

CONCLUSION AND SUGGESTION Conclusion
Based on the results of testing and data analysis using the Fixed Effect Model on SIZE, ROA, SA and CR variables, it can be concluded as follows: 1.
The results showed that company size did not affect DAR 2.
The results show that ROA has a negative effect on DAR 3.
The results showed that the Asset Structure (SA) had a positive effect on DAR 4.
The results showed that liquidation (CR) had no effect on DAR.