DETERMINANTS OF FINANCIAL LEVERAGE: THE CASE OF LARGEST AIRLINES IN ASIA

This study is developed to examine the determinants of financial leverage of capital structure of airlines industry in Asia for the period from 2012 to 2016. Airlines industry is selected as sample of this study as it reflects the highest energy intensive industry based on the largest amount of fuel consumption on the business (Bratlie, 2012). This study defined airline as an operation entity that provides services to carry people and freight by air with schedule routes provided. This study, using panel data analysis, reports that size and growth have a positive relationship to financial leverage. In contrast, profitability and age are negatively related. Regardless of the signs, all the explanatory variables in this study are strongly significant in determining financial leverage (measured by debt to equity ratio).