The Determinants of Capital Structure in Indonesian Hotel Operated Firms
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Capital structure remains a critical issue in corporate finance, as the balance between debt and equity financing influences financial risk, firm value, and long-term financial sustainability. Although trade-off theory, pecking order theory, and agency theory provide established theoretical explanations for corporate financing decisions, sector-specific empirical evidence concerning Indonesia's capital-intensive hospitality industry during the post-pandemic recovery period remains limited. This study aimed to examine the effects of profitability, liquidity, growth opportunities, cash flow volatility, institutional ownership, and firm size on the capital structure of Indonesian hotel companies listed on the Indonesia Stock Exchange (IDX) from 2022 to 2025. A quantitative explanatory research design was employed using balanced panel data regression involving 21 hotel companies selected through purposive sampling, yielding 84 firm-year observations. Model selection using the Lagrange multiplier (LM) test supported the random-effects model (REM) as the preferred estimator, and diagnostic tests were conducted to assess normality, multicollinearity, autocorrelation, and heteroscedasticity. The regression results yielded an adjusted coefficient of determination (adjusted R²) of 0.2279, indicating that the model explained approximately 22.79% of the variation in capital structure. The model was statistically significant overall (p = 0.000193). Among the six explanatory variables, only profitability and growth opportunities exhibited statistically significant relationships with capital structure. Profitability demonstrated a significant negative relationship, consistent with pecking order theory, whereas growth opportunities exhibited a significant positive relationship, consistent with trade-off theory. Conversely, liquidity, cash flow volatility, institutional ownership, and firm size did not demonstrate statistically significant relationships with capital structure. These findings suggested that industry-wide uncertainty and financial pressures during the post-pandemic recovery period may have influenced the relevance of conventional firm-specific determinants of capital structure. The results further indicated that Indonesian hotel companies tended to rely on internally generated funds while selectively utilizing debt financing to support growth opportunities. This study provides practical insights for corporate managers, investors, and policymakers regarding financing decisions and capital structure management in Indonesia's hospitality industry.
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