| Summary: | The purpose of this study is to examine the moderating effect of corporate governance on the relationship between capital structure and firm performance. This study uses secondary data in the form of financial reports at the end of 2019 from micro-financial institutions (rural banks) with a total of 506 units. Data were analyzed using the Moderated Regression Analysis. Results indicate that capital structure financing decisions have a positive contribution to financial performance. However, this only applies to short-term debt. Otherwise, long-term debt has a negative and insignificant effect on both return on assets and return on equity. These results support the view of the pecking order theory, as empirical evidence that the opposite effect between firm profits and capital structure. The results of the moderation analysis show that only the size of the board of commissioners can strengthen the relationship between capital structure and company performance, while board size and ownership concentration are not able to moderate the relationship between capital structure and company performance.
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