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Capital structure determinants and the speed of adjustment towards capital structure target: evidence from Indonesian state-owned enterprises

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  • Subiakto Soekarno
  • Mandra Lazuardi Kitri
  • Suryo Utomo

Abstract

This paper provides the empirical evidence of the capital structure determinants and the speed of adjustment to reach the target in Indonesian state-owned enterprises (SOEs) during the period between 1995 and 2013. Using static and dynamic model with Generalised Least Squares estimation multiple regression technique, the result shows that Indonesian SOEs have their own capital structure determinants. The SOEs have a target capital structure following trade-off theory. The speed of adjustment towards capital structure target is 45.65% annually, which means that SOEs close two-third of the gap to their capital structure target within two years.

Suggested Citation

  • Subiakto Soekarno & Mandra Lazuardi Kitri & Suryo Utomo, 2016. "Capital structure determinants and the speed of adjustment towards capital structure target: evidence from Indonesian state-owned enterprises," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 9(4), pages 388-400.
    • Handle: RePEc:ids:ijmefi:v:9:y:2016:i:4:p:388-400
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    Cited by:

    1. Aly Saad Mohamed Dawood & Mahmoud Otaify, 2021. "Target Capital Structure of Egyptian Listed Firms: Importance of Growth and Risk Factors," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 158-173, January.

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