Testing the Pecking Order Theory of Internal Funding Deficit: Evidence from Indonesian Sub-Sector Property and Real Estate

Property and real estate subsectors in Indonesia are part of the cause to economic augmentation, but in the recent years its escalation has been slowing. Property and real estate fit in a capital-intensive sub-sector, as well as companies requiring huge external capital. External financing is also faced with the risk that the company should be held accountable to those external parties. The objective of this research is to analyze the company's capital structure in the property and real estate sub-sector through testing the pecking order theory. The results of the analysis reveals that the internal funding deficit has a significant positive impact on long-term corporate debt changes in the agricultural sector listed on the BEI. This presents that in determining the company's capital structure policy, companies in property and real estate sub-sector listed on BEI have employed pecking order theory concept.