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Relationship between debt maturity and IPO: the case of Indonesian firms

Author

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  • Sarah Aulia Andriana
  • Yunieta Anny Nainggolan

Abstract

Initial public offering (IPO) is a big step in company life cycle as the time when company evolves from private to public firm by adding another source of financing. Studying the impact of IPO to debt maturity structure choices in Indonesia is important because debt maturity has an important role in emerging markets' macroeconomic condition. Based on literature review, it is expected for companies to take debt with longer maturity post-IPO for the benefits and accessibility. Company sample is taken from Indonesia Stock Exchange, using data of companies that have undergone IPO from 2008-2011. After analysis, it is found that one and two years after IPO, newly listed firms increase the use of long-term debt. Other statistically significant variables are firm's asset maturity, leverage, and growth opportunity. Result of this research would be an addition to Indonesia's financial literature and give insight of IPO's implication to Indonesian firms.

Suggested Citation

  • Sarah Aulia Andriana & Yunieta Anny Nainggolan, 2020. "Relationship between debt maturity and IPO: the case of Indonesian firms," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 10(4), pages 464-479.
    • Handle: RePEc:ids:afasfa:v:10:y:2020:i:4:p:464-479
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