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The speed of adjustment to capital structure target before and after financial crisis: Evidence from Indonesian state owned enterprises
Soekarno S.a, Kitri M.L.a, Utomo S.a
a School of Business and Management, Institut Teknologi Bandung, Bandung, 40132, Indonesia
[vc_row][vc_column][vc_row_inner][vc_column_inner][vc_separator css=”.vc_custom_1624529070653{padding-top: 30px !important;padding-bottom: 30px !important;}”][/vc_column_inner][/vc_row_inner][vc_row_inner layout=”boxed”][vc_column_inner width=”3/4″ css=”.vc_custom_1624695412187{border-right-width: 1px !important;border-right-color: #dddddd !important;border-right-style: solid !important;border-radius: 1px !important;}”][vc_empty_space][megatron_heading title=”Abstract” size=”size-sm” text_align=”text-left”][vc_column_text]There are special characteristics possessed by the State Owned Enterprises (SOE) in determining the target capital structure before and after a crisis situation. This research objective is to examine whether Indonesian SOEs have a particular capital structure targets, and how fast is the speed of adjustment to the target before and after global financial crisis. This research includes all relevant state-owned enterprises in Indonesia Stock Exchange. Using Generalized Least Squares, the dynamic capital structure model are developed using multiple regressions. This model assumes capital structures adjust to its target partially each year. We separated the data for analysis before (1994-2007) and after crisis (2008- 2014) to examine the difference in the speed of adjustment. With reference to the capital structure theories, this study indicates that SOE have particular factors apart from common determinants of capital structure such as: dividend and initial leverage. Other factors that give significant impact in the dynamic model of capital structure include lagged variables of growth opportunity, asset intensity, firm size, and past leverage. This finding concludes that SOEs have capital structure target following trade off theory. Annually, before and after global financial crisis, the speed of adjustment toward capital structure target is 39.79% and 26.00% respectively. From the dynamic model, we conclude that the cost of adjustment after the crisis is higher than before.[/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”Author keywords” size=”size-sm” text_align=”text-left”][vc_column_text][/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”Indexed keywords” size=”size-sm” text_align=”text-left”][vc_column_text]Dynamic capital structure,Global financial crisis,SOEs capital structure,Speed of adjustment[/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”Funding details” size=”size-sm” text_align=”text-left”][vc_column_text][/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”DOI” size=”size-sm” text_align=”text-left”][vc_column_text][/vc_column_text][/vc_column_inner][vc_column_inner width=”1/4″][vc_column_text]Widget Plumx[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row][vc_column][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][/vc_column][/vc_row]