摘要：The objective of this study is to improve the model of optimal capital structure. This research aims
to investigate the role of the industrial factors on the optimal capital structure proxy by including
industry factors in the existing model and using the company characteristic variables as control
variables. This research applies seven industrial variables: Number of Firms in Industry (NFI),
Industry Competitive Dynamic (ICD), Firm Response to Industry Competitive (FRI), Numbers of
Employees in an Industry (NEI), Employees’ Share of Firm Quasi Rents (ESQ), Category of Product
Diversification (CPD), and Diversification level of Relatedness (DRD). This research determines
whether the proposed proxy in this research is better than the two other proxies. The testing
procedure is designed to replicate the procedure of Farhat (2003). The data used in the study consist
of 83 companies from 13 industries listed on IDX for the period of 2001-2014. The results showed
that the industry variables can improve the existing optimal capital structure proxies. This finding
contributes to the industry in that it can improve the dynamic trade-off model of capital structure.
