Institutional Change and Corporate Financing in Indonesia: Estimating the Effects of Social and Political Factors on Capital Structure
AbstractThis study investigates the factors determining the capital structure of Indonesian listed companies before and after the implementation of economic reform policies subsequent to the 1997-1998 Asian financial crisis. The estimation analysis of the panel data for the period 1994-1997 and 2000-2006 reveals several factors that determined substantive change in the financing activities of these listed companies. The capital structure of Indonesian companies had not been explained sufficiently by the standardized theory of corporate financing, which had not considered the effects of the specific social and political elements as well as business conglomerates, before the Asian financial crisis. However, the capital structure of Indonesian companies became fitted more to the corporate financing theory, after the influence of social and political factors of corporate attributes weakened substantially following the post-crisis reform policies. This significant change is considered to result from institutional change caused by the financial and corporate reforms in the post-financial crisis era.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-108.
Date of creation: Dec 2009
Date of revision:
Corporate Finance; Capital Structure; Ethnic network; Indonesia;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-13 (All new papers)
- NEP-CFN-2010-03-13 (Corporate Finance)
- NEP-SEA-2010-03-13 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laurence Booth, 2001.
"Capital Structures in Developing Countries,"
Journal of Finance,
American Finance Association, vol. 56(1), pages 87-130, 02.
- Wiwattanakantang, Yupana, 1999. "An empirical study on the determinants of the capital structure of Thai firms," Pacific-Basin Finance Journal, Elsevier, vol. 7(3-4), pages 371-403, August.
- Hill,Hal, 2000. "The Indonesian Economy," Cambridge Books, Cambridge University Press, number 9780521663670, December.
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