The aim of this paper is to analyze the speed of adjustment towards the leverage target of plantation companies especially oil palm in Indonesia. The data which were used in this paper covered the years of 2009 – 2013. The used sample of the plantation companies was listed on the Indonesia Stock Exchange (IDX) and the analysis was based on the partial adjustment model. The results showed the plantation company’s internal characteristics in which the financing deficit and market capitalization affected the speed of adjustment, whereas macroeconomic condition relatively did not affect at all. This was due to the long-term investment of oil palm plantation. Although macroeconomic factors in this paper relatively did not affect the speed of adjustment of the capital structure of the oil palm plantation companies, the government must keep macroeconomic in a good condition to support the business. If an economic crisis happens, it will adversely affect the palm oil business and the financial aspect will affect the condition of the company’s capital structure to make adjustments to the target.
Keywords: Capital Structure, Oil Palm Plantation Companies, Partial Adjustment Model, Speed of Adjustment.
