The purpose of this study is to examine and analyze the effect of profitability, firm size, firm growth, tangibility, liquidity and business risk on the capital structure of firms engaged in the basic materials sector listed on the Indonesia Stock Exchange. Annual data are used in this study during the observation period from 2016 to 2020. The data used is in the form of panel data, in the form of a combination of annual time series data with cross sections. The population in this study are the basic materials sector firms listed on the Indonesia Stock Exchange for the period 2016 to 2020 as many as 42 firms. Samples were taken using purposive sampling technique, where a sample of 26 firms was obtained in a span of 5 years of observation so that a total of 130 observations were obtained. The data in the study were obtained from the Indonesia Stock Exchange. Analysis of the data in the study using panel data regression. Fixed Effect Model is the right model to be used in this study. The results of the analysis show that profitability has a negative effect on the capital structure that supports the Pecking Order theory. Firm size, tangibility, and business risk have a positive effect on the capital structure that supports the Trade-off Theory. Meanwhile, firm growth and liquidity have no effect on the capital structure of firms in the basic materials sector in Indonesia.

Keywords : Capital Structure, Profitability, Firm Size, Firm Growth, Tangibility, Liquidity, Business Risk