How Maritime Connectivity and Crude Oil Price Determine Capital Structure of Maritime Industry in Indonesia

DOI

10.2991/978-94-6463-234-7_3How to use a DOI?

Keywords

Capital Structure; Maritime Connectivity; Oil Crude Price; Maritime Industry; Investment Decision

Abstract

Maritime industries dominate the world’s trade transportation mode because more than 90% of international trade volume is transported by sea. Indonesia as the biggest maritime country in the world has a big contribution to international trade volume. Investment decisions are very important for the sustainability and competitiveness of the companies in this industry. This article showed that several variables such as oil crude price and maritime connectivity index have determined the capital structure of firms in the maritime industry in Indonesia. The research analyzed 23 listed companies in the maritime industry in Indonesia between 2016–2020 using the ordinary least square and fixed effect model. The results of this study are in accordance with the pecking order theory as well as the trade-off theory. It showed that financial leverage was negatively affected by return on asset, and positively affected by tangibility and operating cash flow. In addition, oil crude price and maritime connectivity index have strengthened and weakened the correlations between financial leverage and its independent variable such as the return of assets, tangibility, and operating cash flow. These findings could help managers of the company to make a decision about their optimal capital structure based on those variables. This study has focused on the macroeconomic factors that affect firms’ capital structure such as crude oil prices and maritime connectivity. Companies in the maritime industry in Indonesia have to be more focused on the tangibility and profitability of the company to make an investment decision. Furthermore, the results showed that fluctuation of crude oil prices and maritime connectivity index also become factors to be considered to optimize the capital structure of the companies.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Nur Huda Salasa Majid
AU  - Imo Gandakusuma
PY  - 2023
DA  - 2023/09/29
TI  - How Maritime Connectivity and Crude Oil Price Determine Capital Structure of Maritime Industry in Indonesia
BT  - Proceedings of the 7th Global Conference on Business, Management, and Entrepreneurship (GCBME 2022)
PB  - Atlantis Press
SP  - 16
EP  - 25
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-234-7_3
DO  - 10.2991/978-94-6463-234-7_3
ID  - Majid2023
ER  -