OPTIMIZING CAPITAL STRUCTURE TO IMPROVE CORPORATE FINANCIAL PERFORMANCE
Keywords:
Optimization, Capital Structure, Corporate Financial Performance.Abstract
The purpose of this study is to investigate how optimizing the capital structure can enhance a company's financial performance. This study gathers and examines information from numerous pertinent theoretical and empirical sources using the literature research approach in order to gain a thorough grasp of the connection between capital structure and corporate financial performance. The findings indicate a positive relationship between the financial success of the business and capital structure optimization. The implementation of the optimal proportion of debt and equity is proven to be able to reduce the cost of capital, while optimizing the rate of return on investment (ROI) and return on equity (ROE). However, research also indicates that the suitability of capital structure is highly dependent on industry context, firm characteristics, and market conditions. Thus, companies need to adjust their capital structure strategy by considering these factors to achieve optimal financial performance improvement.
References
Abdul, M., Ingabire, A., Lam, C., Bennett, B., & ... (2024). Indigenous food sovereignty assessment—A systematic literature review. Nutrition & …, Query date: 2024-05-10 07:14:07. https://doi.org/10.1111/1747-0080.12813
Aguome, N. M. (2021). Capital Structure and Financial Returns: Longitudinal Panel Evidence from NReits. Journal of Economics, Finance and Management Studies, 4(1). https://doi.org/10.47191/jefms/v4-i1-03
Akbar, R., & Ediwarman, E. (2022). Analysis of Capital Structure, Profitability, and Liquidity on Indonesia Stock Exchange’s Company Dividend Distributed 2016-2020. Business Review and Case Studies, Query date: 2024-05-10 20:10:13. https://doi.org/10.17358/brcs.3.2.123
Akhmadi, A., Ichwanudin, W., & Uyun, U. (2021). Capital structure, company size, and Company value: Test significance Moderate model. Jurnal Riset Akuntansi Terpadu, 14(2), 137–137. https://doi.org/10.35448/jrat.v14i2.12428
Alatrsh, M. B. (2020). An Appraisal FOR Evaluation Of The Capital Structure In Wafrah Company Industry And Development. SSRN Electronic Journal, Query date: 2024-05-10 20:10:13. https://doi.org/10.2139/ssrn.3659334
Chowiyah, C., & Nurasik, N. (2023). Company Size, Capital Structure and Cash Flow Against Company Value in Construction Companies Listed on the Indonesia Stock Exchange (IDX). Indonesian Journal of Innovation Studies, 21(Query date: 2024-05-10 20:10:13). https://doi.org/10.21070/ijins.v21i.765
Darman, D., & Hilumalo, A. N. A. (2023). Capital Structure and Company Size Impact on Financial Performance: A Literature Review. West Science Interdisciplinary Studies, 1(11), 1192–1197. https://doi.org/10.58812/wsis.v1i11.383
Dignam, A., & Lowry, J. (2020). 7. Share capital. Company Law, Query date: 2024-05-10 20:10:13, 115–143. https://doi.org/10.1093/he/9780198848455.003.0007
Dong, W., Li, Y., Sun, L., & Liu, Y. (2024). Developing pre-service teachers’ computational thinking: A systematic literature review. … Journal of Technology and Design Education, Query date: 2024-05-10 07:14:07. https://doi.org/10.1007/s10798-023-09811-3
Faissal, F. N. L. & Triyono. (2023). THE INFLUENCE OF CAPITAL STRUCTURE, COMPANY SIZE, ADVERTISING RATIO, INTELLECTUAL CAPITAL, AND COMPANY AGE ON THE COMPANY’S FINANCIAL PERFORMANCE; (A STUDY OF NON-CYCLICAL CONSUMER SECTOR COMPANIES ON IDX FOR 2018-2021). International Journal of Management & Entrepreneurship Research, 5(5), 291–300. https://doi.org/10.51594/ijmer.v5i5.490
Farhatulmaula, D. S. & Suparmin. (2024). The Influence of Financial Performance, Capital Structure, Intellectual Capital on Company Value. Formosa Journal of Sustainable Research, 3(1), 111–124. https://doi.org/10.55927/fjsr.v3i1.7503
Fathihani, F. (2020). The Influences of Capital Structure, Company Growth, Profitability, and Company Sizes on Profit Management. Proceedings of The International Conference on Environmental and Technology of Law, Business and Education on Post Covid 19, ICETLAWBE 2020, 26 September 2020, Bandar Lampung, Indonesia, Query date: 2024-05-10 20:10:13. https://doi.org/10.4108/eai.26-9-2020.2302688
French, D. (2021). 10. Distributions and maintenance of capital. Mayson, French & Ryan on Company Law, Query date: 2024-05-10 20:10:13, 246–276. https://doi.org/10.1093/he/9780198870029.003.0010
Gökçearslan, S., Tosun, C., & Erdemir, Z. (2024). Benefits, challenges, and methods of artificial intelligence (AI) chatbots in education: A systematic literature review. International Journal of Technology in …, Query date: 2024-05-10 07:14:07. https://eric.ed.gov/?id=EJ1415037
Goso, G. (2022). The Influence of Capital Structure, Liquidity, and Company Size on Sulselbar Bank’s Profitability. Enrichment : Journal of Management, 12(4), 2847–2853. https://doi.org/10.35335/enrichment.v12i4.745
Haditya, A. N. (2022). Capital Structure, Audit Committee, Company Growth and Company Value. EAJ (Economic and Accounting Journal), 5(3), 251–260. https://doi.org/10.32493/eaj.v5i3.y2022.p251-260
Hannigan, B. (2021a). 21. Share capital—Capital raising and payment. Company Law, Query date: 2024-05-10 20:10:13, 497–530. https://doi.org/10.1093/he/9780198848493.003.0021
Hannigan, B. (2021b). 22. The doctrine of capital maintenance. Company Law, Query date: 2024-05-10 20:10:13, 531–583. https://doi.org/10.1093/he/9780198848493.003.0022
Hannigan, B. (2021c). 23. Loan capital—Secured creditors and company charges. Company Law, Query date: 2024-05-10 20:10:13, 584–604. https://doi.org/10.1093/he/9780198848493.003.0023
Hertina, D. (2024). The Influence of Liquidity, Profitability, Company Growth and Capital Structure on Company Value. JASa (Jurnal Akuntansi, Audit Dan Sistem Informasi Akuntansi), 8(1), 148–158. https://doi.org/10.36555/jasa.v8i1.2451
Hussein, A. (2020). The influence of capital structure on company performance: Evidence from Egypt. Corporate Ownership and Control, 18(1), 8–21. https://doi.org/10.22495/cocv18i1art1
Irdiana, S. (2021). Capital Structure: Do Size And Profitability Of A Company Highly Affect Capital Structure? Jurnal Ilmu Manajemen Advantage, 5(2), 94–100. https://doi.org/10.30741/adv.v5i2.864
Kibtiyah, M., & Maryanti, E. (2022). The Influence of Good Corporate Governance, Company Size, Capital Structure and Company Growth on the Financial Performance of Retail Companies Listed on the IDX. Indonesian Journal of Innovation Studies, 20(Query date: 2024-05-10 20:10:13). https://doi.org/10.21070/ijins.v20i.717
Kim, K., Lee, K., & Kwon, O. (2024). A systematic literature review of the empirical studies on STEAM education in Korea: 2011–2019. Disciplinary and Interdisciplinary Education in …, Query date: 2024-05-10 07:14:07. https://doi.org/10.1007/978-3-031-52924-5_6
Kurniawati, D., & Yatna, C. N. (2020). THE INFLUENCE OF CAPITAL STRUCTURE, COMPANY SIZE, CORPORATE GOVERNANCE ON COMPANY PERFORMANCE WITH AGENCY COST AS INTERVENING VARIABLES. Russian Journal of Agricultural and Socio-Economic Sciences, 108(12), 81–88. https://doi.org/10.18551/rjoas.2020-12.10
Lubis, R. S. F., Milanie, F., & Suwarno. (2022). The Influence of Company Size, Working Capital, and Capital Structure on Profitability of Consumer Goods Companies Listed on the Indonesia Stock Exchange. SIASAT, 7(3), 285–296. https://doi.org/10.33258/siasat.v7i3.132
Melananda, W., & Sari, W. O. I. (2024). The Influence of Company Size, Profitability, And Sales Growth on Capital Structure. Journal of Social Research, 3(2). https://doi.org/10.55324/josr.v3i2.1937
Moore, I. (2020). 10. Loan Capital. Concentrate Questions and Answers Company Law, Query date: 2024-05-10 20:10:13, 179–194. https://doi.org/10.1093/he/9780198856726.003.0010
Mustakin, M., Asakdiyah, S., & Hidayat, T. (2021). CAPITAL STRUCTURE, COMPANY SIZE AND PROFITABILITY TERHADAP NILAI PERUSAHAAN. Jurnal Proaksi, 8(2), 303–312. https://doi.org/10.32534/jpk.v8i2.1923
Nesset, V., Vanderschantz, N., & ... (2024). Advocating for a more active role for the user in LIS participatory research: A scoping literature review. Journal of …, Query date: 2024-05-10 07:14:07. https://doi.org/10.1108/JD-11-2022-0254
Purwanti, T. (2020). The Effect of Profitability, Capital Structure, Company Size, and Dividend Policy on Company Value on the Indonesia Stock Exchange. International Journal of Seocology, Query date: 2024-05-10 20:10:13, 60–66. https://doi.org/10.29040/seocology.v1i02.9
Rahayu, N. T., & Darim, A. (2020). ANALYSIS OF INFLUENCE OF CAPITAL STRUCTURE, COMPANY SIZE, COMPANY GROWTH AND PROFITABILITY ON CORPORATE VALUE. International Journal of Global Accounting, Management, Education, and Entrepreneurship, 1(1), 10–27. https://doi.org/10.48024/ijgame2.v1i1.11
Reid, W., & Myddelton, D. R. (2020). Capital structure. The Meaning of Company Accounts, Query date: 2024-05-10 20:10:13, 163–184. https://doi.org/10.4324/9781003073796-9
Reza, A. K., Kufepaksi, M., & Jubaedah, J. (2023). Capital structure, company liquidity, and company size on company value mediated by credit risk. Indonesian Journal of Multidisciplinary Science, 3(1), 81–90. https://doi.org/10.55324/ijoms.v3i1.706
Ria, R. (2023). Determinant Factors of Corporate Governance on Company Performance: Mediating Role of Capital Structure. Sustainability, 15(3), 2309–2309. https://doi.org/10.3390/su15032309
Rimeš, M. (2024). Analysis of the Capital Structure of the Company in the Period Before and During the COVID-19 Pandemic. EDAMBA 2023: Conference Proceedings, Query date: 2024-05-10 20:10:13. https://doi.org/10.53465/edamba.2023.9788022551274.250-260
Roach, L. (2022a). 17. The maintenance of capital. Company Law, Query date: 2024-05-10 20:10:13, 485–522. https://doi.org/10.1093/he/9780192895677.003.0017
Roach, L. (2022b). 20. Debt capital and security. Company Law, Query date: 2024-05-10 20:10:13, 607–630. https://doi.org/10.1093/he/9780192895677.003.0020
Roach, L. (2023). 7. Capital and capital maintenance. Company Law Concentrate, Query date: 2024-05-10 20:10:13, 127–151. https://doi.org/10.1093/he/9780198881407.003.0007
Rohmah, A. N., Rahmawati, I. Y., Tubastuvi, N., & Alfalisyado, A. (2024). The Influence of Company Growth, Capital Structure, Company Size, Profitability and Liquidity on Company Value. Journal of Finance and Business Digital, 3(1). https://doi.org/10.55927/jfbd.v3i1.8499
Rosyadi, T. D., & Hariasih, M. (2021). The Effect of Sales Growth, Company Growth and Company Size on Capital Structure in the Food and Beverages Sub-Sector Listed on the Indonesia Stock Exchange for the 2015-2019 Period. Academia Open, 5(Query date: 2024-05-10 20:10:13). https://doi.org/10.21070/acopen.5.2021.1671
Santosa, A., Widowati, S. Y., & Kurniawati, E. (2020). Capital Structure Evaluation Based Company Sizes And Profitability. Jurnal Akuntansi Dan Pajak, 20(2). https://doi.org/10.29040/jap.v20i2.765
Sholeha, I. (2023). The Influence of Capital Structure, Profit Growth, Profitability and Company Size on the Quality of Earnings. Scientia, 2(1), 53–62. https://doi.org/10.51773/sssh.v2i1.133
Sianipar, S. R. (2023). Determining the Optimal Capital Structure of Coal Company. International Journal of Current Science Research and Review, 6(7). https://doi.org/10.47191/ijcsrr/v6-i7-116
Suwandhayani, A., & Fitdiarini, N. (2020). Capital structure and investment opportunity set on the value of the company. Advances in Business, Management and Entrepreneurship, Query date: 2024-05-10 20:10:13, 429–432. https://doi.org/10.1201/9780429295348-93
Teixeira, J., & Carvalho, A. (2024). Corporate governance in SMEs: A systematic literature review and future research. … : The International Journal of Business in …, Query date: 2024-05-10 07:14:07. https://doi.org/10.1108/CG-04-2023-0135
thamara, R. dheby dwi, Hizazi, A., & Ridwan, M. (2023). The Influence of Capital Structure and Company Characteristics on Company Value as Mediated by Profitability. Asian Journal of Natural Sciences, 2(4), 235–238. https://doi.org/10.55927/ajns.v2i4.6496
Utami, S. W. (2023). The Effect of Financial Performance and Capital Structure on Company Value With Company Size as a Moderation Variable. Asian Journal of Economics, Business and Accounting, 23(24), 112–123. https://doi.org/10.9734/ajeba/2023/v23i241191
Wibowo, I. A., & Surjandari, D. A. (2023). Capital Structure, Company Size and Profitability Influence on Company Value with Managerial Ownership as Moderation Variables. International Journal of Social Service and Research, 3(1), 1–14. https://doi.org/10.46799/ijssr.v3i1.212
Downloads
Published
Issue
Section
License
Copyright (c) 2024 INTERNATIONAL JOURNAL OF ECONOMIC LITERATURE
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
INTERNATIONAL JOURNAL OF ECONOMIC LITERATURE © 2023 by Adisam Publisher is licensed under CC BY-SA 4.0
