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Political Patronage on Capital Structure in Indonesia

Author

Listed:
  • Muhammad Istan

    (State Institute of Islamic Studies, Curup, Bengkulu, Indonesia Author-2-Name: Kamaludin Author-2-Workplace-Name: Bengkulu University, Bengkulu, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective � The purpose of this research is to test the theory of capital structure by determining whether the relationship is affected by Political Patronage. The study will examine political support, capital structure and financial performance of the company. Methodology/Technique � The data in this research is in the form of financial ratios displayed in the financial report of each company listed from 2010 to 2016. The sample was selected using purposive sampling with as many as 70 companies indicated to have political support. The data was analysed using regression analysis. Findings � The results show that Political Patronage has an influence on capital structure and political Patronage has a weak effect on financial performance. Type of Paper: Empirical

Suggested Citation

  • Muhammad Istan, 2019. "Political Patronage on Capital Structure in Indonesia," GATR Journals jfbr161, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jfbr161
    as

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    References listed on IDEAS

    as
    1. Bliss, Mark A. & Gul, Ferdinand A., 2012. "Political connection and leverage: Some Malaysian evidence," Journal of Banking & Finance, Elsevier, vol. 36(8), pages 2344-2350.
    2. Fraser, Donald R. & Zhang, Hao & Derashid, Chek, 2006. "Capital structure and political patronage: The case of Malaysia," Journal of Banking & Finance, Elsevier, vol. 30(4), pages 1291-1308, April.
    3. Hongbo Duan & Abdul Razak bin Chik, 2012. "Institutional Environment, Political Connection and Financial Constraints---Evidence from Private Enterprise in China," Business and Management Research, Business and Management Research, Sciedu Press, vol. 1(1), pages 133-140, March.
    4. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 995-1025.
    5. Paola Sapienza, 2002. "The Effects of Banking Mergers on Loan Contracts," Journal of Finance, American Finance Association, vol. 57(1), pages 329-367, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Political Patronage; Capital Structure; Financial Performance.;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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