MACROECONOMICS, INDUSTRIAL SENSITIVITY AND CAPITAL STRUCTURE –THE CORPORATE INVESTMENT DECISION

Diyan Lestari, Vina Meliana (2016) Macroeconomics, Industrial Sensitivity And Capital Structure –the Corporate Investment Decision

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ABSTRACT

Every economic condition has its own effect on corporate investment decision. The good economic condition may have positive effect on business and vice versa. The economic uncertainty would be seen as a big risk for almost all the decision makers in a coun try. Indonesia has one of the largest economies in Southeast Asia, with GDP growth 4,8% in 2015, and with several economic events, it effects fluctuation in business activities. Furthermore, the capital structure indicates the risk preference of a company. It can be positive or negative signal to investors, and it‟s very crucial in investment decision making. Using listed manufacturing firms in IDX from 2009 – 2015, this study indicates there is a positive effect of capital structure on corporate investment decision. Industrial sensitivity strengthens the effect of macroeconomics on investment decision, in a good economic condition, sensitive industry will respon positively and make easier decision on investment.

Keywords : macroeconomics, industrial sentivity, capital structure, investment decision