Determinants Capital Structure of Small and Medium Enterprises in Indonesia

This research aims to analyze the determinants of capital structure. The independent variables in this study are
corporate taxes, company size, tangible assets, corporate risk, profitability, non-debt tax protection, and liquidity. While the
dependent variable is short-term debt, long-term debt, and total debt. The sample of this study uses 61 Small and Medium
Enterprises companies listed on the Pefindo Index for the period of 2019-2021. The sampling technique uses purposive sampling
and the analysis method uses panel data regression. The results explained that corporate taxes, tangible assets, and non-debt tax
shields do not affect capital structure. Company size does not affect short-term debt and total debt. However, it has a significant
negative effect on long-term debt. Company risk and liquidity significantly negatively affect short-term debt and total debt.
However, it does not affect long-term debt. Profitability has a significant positive effect on short-term debt and a significant
negative effect on long-term debt. The implication of the research that has been done is to provide direction for financial managers
regarding the optimal use of capital structure to achieve the company's goal of increasing the welfare of shareholders. As for
investors, investors should choose companies that have high company size, low risk, and high liquidity.