Analysis Of Profitability, Corporate Governance On Capital Structure Mediated By Cost Of Capital

Oktarini Oktarini, Najmudin Najmudin, Dian Purnomo Jati, Prihono Prihono

Abstract


This study examines the effect of profitability and corporate governance on capital structure in SMC Composite Index companies on the Indonesia Stock Exchange during the 2019-2022 period. Using 134 total data selected by purposive sampling and analyzed using multiple linear regression through the SPSS 20 program, the results showed that managerial ownership, institutional ownership, board size, and ownership concentration had no effect on capital structure, while board size had a positive effect. The cost of capital also has a positive effect on capital structure, but it cannot mediate the effect of corporate governance on capital structure. Profitability is found to have a negative effect on capital structure. Therefore, companies are advised to consider optimal funding decisions in the planning, implementation, and supervision of corporate governance to maximize operations and investments.

Keywords: capital structure, corporate governance, cost of capital, profitability


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