Difference in Funding Decision Based on the Growth Potential of the Company in Indonesia

Authors

  • Darmawan Darmawan Sunan Kalijaga State Islamic University Yogyakarta http://orcid.org/0000-0002-2365-4475
  • Edrich Molla Department of Business Administration, Victoria University of Bangladesh

DOI:

https://doi.org/10.26458/jedep.v9i4.678

Keywords:

Funding, Company Growth Potential

Abstract

The purpose of the study, The research objective was to To find out the differences in funding decisions between companies that have high growth potential and companies that have low growth potential. Research is a quantitative study. Mean difference test is preceded by Common Factor Analysis to analyze which factors in the Investment Opportunity Set can represent the growth ratio of the company so that it can be used to separate companies with high and low growth potential. Furthermore, the analysis is carried out with a regression model to determine the difference in funding decisions on the growth potential of different companies. The results showed that The consumer goods industry and mining sector sectors that have not proven to be significant are the differences in funding decisions between companies that have the potential to grow high and those with low growth potential. In other sectors, it is evident that there are significant differences in funding decisions between companies that have the potential to grow high and those with low growth potential.

Author Biography

Edrich Molla, Department of Business Administration, Victoria University of Bangladesh

 Department of Business Administration, Victoria University of Bangladesh

References

AlNajjar & Ahmed, R. B. (2001). Empirical Validation of a General Model of Growth Opportunities. Journal of Managerial Finance, Vol. 27, No.3, 72-99.

Brealey, R. A. & Myers, S. C. (1991). Principles of Corporate Finance, 4th edition. McGraw Hill Inc.

Cesar Armando Mendoza Palma, A. V. (2018). A House: A Small Company . International Journal of Physical Sciences and Engineering , 26-34.

Christian Herdinata. (2009). Kebijakan Pendanaan Dan Dividen Dengan Pendekatan Investment Opportunity Set. Jurnal Keuangan dan Perbankan, Vol. 13, No.2 Mei 2009, 237 – 248.

Donaldson, G. (1961). Corporate Debt Capacity: A Study of Corporate Debt Policy and Determination of Corporate Debt Capacity. Boston: Division of Research, Harvard Graduate School of Business Administration.

Eriks. (2018). Perkembangan Hukum Politik Pertambangan Mineral dan Batubara dan Implikasinya pada Hukum Adat. Yuridis, 114-115.

Fijrijanti, T. & Hartono, J. (2000). Analisis Korelasi Pokok IOS dengan Realisasi Pertumbuhan Perusahaan, Kebijakan Pendanaan dan Dividen. Makalah Simposium Nasional Akuntansi III, 851-877.

Global Business Guide Indonesia. (2016). Global Business Guide Indonesia. Retrieved from gbgindonesia: http://www.gbgindonesia.com/en/manufacturing/article/2016/indonesia_s_fmcg_sector_marred_by_low_consumer_confidence_but_boosted_by_modern_retail_11456.php

Harianto, Farid & Sudomo, Siswanto. (1998). Perangkat dan Teknik Analisis Investasi di Pasar Modal Indonesia. Jakarta: Bursa Efek Jakarta.

Husnan, Suad. (2010). Manajemen Keuangan Teori Dan Penerapan (Keputusan Jangka Panjang). Edisi Keempat. BPFE :Yogyakarta.

Ida Ayu Kayika Apsari, N. K. (2019). The Pecking Order Theory Testing on Company Life Cycle . International Research Journal of Management, IT & Social Sciences, 102.

Iswayuni, Y. & Suryanto, L. (2002). Analisis Perbedaan Perusahaan Tumbuh dan Tidak Tumbuh dengan Kebijakan Pendanaan, Deviden, Perubahan Harga Saham dan Volume Perdagangan Pada Bursa Efek Jakarta dengan Pendekatan Asosiasi Proksi Investement Opportunity Set (IOS). Jurnal Bisnis dan Ekonomi, Vol.9, No.2, 120-148.

Jiambalvo, J., & S. Rajgopal. (2002). Institutional ownership and the extent to which stock prices reflect future earnings. Contemporary Accounting Research Vol.19 No.1, 117–145.

Kallapur , S. & Trombley, M.K. (2001). The Invesment Opportunity Set: Determinants, Consequences and Measurement. Managerial Finance, Vol.27, No.3, 3-15.

Khanna, T., & K. Palepu. (1999). Policy shocks, market intermediaries, and corporate strategy: the evolution of business groups in Chile and India. Journal of Economics & Management Strategy. Vol.8 No.2, 271-310.

Klaus Dommes, M. S. (2019). Capital Structures in German Small and Mid Caps: Does Trade-Off or Pecking Order Theory Explain Current Reality Better? . SRP: Journal of Financial Risk Management, 151.

Kole, S. R., & Lehn, K. M. (1991). Deregulation and the Adaption of Governance Structure: The Case of the US Airline Industry. Journal of Financial Economics, 52.

Lakshmi Balachandra, T. B. (2017). Don’t Pitch Like a Girl!: How Gender Stereotypes Influence Investor Decision. Sage Journals: Entrepreneurship Theory and Practice (ETP), 5.

Lisana B. Martinez, V. S. (2018). SMEs capital structure: trade-off or pecking order theory: a systematic review. Emerald: Journal of Small Business and Enterprise Development, 2.

Malik, D. (2017, Juli Selasa). Viva.co.id #1 newstainment. Retrieved from Viva.co.id: https://www.viva.co.id/arsip/933987-risiko-investasi-besar-investor-tambang-layak-dapat-jaminan

Martin Gunawan. (2017). Pengaruh Faktor Makroekonomi Dan Risiko Terhadap Return Saham Sektor Industri Indonesia. Jurnal Wira Ekonomi Mikroskil, Volume 7, Nomor 02, Oktober 2017.

Myers, S.C. (1984). Capital Structure Puzzle. Journal of Finance, 39 (3), July, 575-592.

Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics. Vol.5, 147-175.

Myers, S.C & N.S Majluf. (1984). Corporate Financing & Invesment Decision When Firm Have Information That Investor Do Not Have. Journal of Financial Economics, 13, 187-221.

Nur Triani, D. T. (2019). Firm Value: Impact of Investment Decisions, Funding Decisions and Dividend Policies . International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9, No. 2, 159.

Nurul Shahnaz Mahdzan, Rozaimah Zainudin & Nikoo Karimi Shahri. (2016). Interindustry dividend policy determinants in the context of an emerging market. Economic Research-Ekonomska Istraživanja,

:1, 250-262.

Paul A. Gompers, W. G. (2019). How Do Venture Capitalists Make Decisions? Elsilver: Journal of Financial Economics, 2.

Permata Sari, W. S. (2019). Factors Affecting Investment Opportunity Set: A Study of Company Advantages and Limitations . Sustainable Business Accounting and Management Review, Vol. 1, No. 1, 1.

Rudy Chandra. (2010). Analisis Pemilihan Saham oleh Investor Asing di Bursa Efek Indonesia. Bisnis & Birokrasi, Jurnal Ilmu Administrasi dan Organisasi, Volume 17, Nomor 2. Mei—Agus 2010, 101-113.

Smith, Jr., W. Clifford, & R. L. Watts. (1992). The investment opportunity set and corporate financing, dividend, and compensation policies. Journal of Financial Economics. Vol.32, 263-292.

Subekti, I., & Suprapti. (2002). Assosiasi Antara Potensi Pertumbuhan Perusahaan dengan Volume Perdagangan Saham dan Asimetri Informasi. Simposium Nasional Akuntansi V, 356-370.

Sudarma, M., Salim, U., Susanto, H. (1998). Analysis Kausalitas Keputusan Dividen, Investasi dan Pendanaan pada Perusahaan Manufaktur di BES. Wacana Vol 1 No.2.

Umar Farooq , Mian Sajid Nazir, Muhammad Musarrat Nawaz. (2012). Operating or Financial Distress? How much Costly these are? American Journal of Scientific Research, Issue 55, 96-108.

Weston, J. Fred and Brigham, Eugene F., (1994). Dasar-dasar Manajemen Keuangan, edisi 9, Erlangga.

Weston, J. Fred & Thomas E. Copeland. (1996). Manajemen Keuangan. Jilid 2. Erlangga. Jakarta.

Yusuf Fatoni, Hadi Paramu, Elok Sri Utami. (2013). Determinan Struktur Modal Pada Perusahaan Pertambangan Sub Sektor Batubara Dan Non Batubara Yang Listed Di Bursa Efek Indonesia. Jurnal Bisnis dan Ekonomi (JBE), Vol. 20, No. 1. Maret 2013,1-11.

Downloads

Published

2020-12-31

How to Cite

Darmawan, D., & Molla, E. (2020). Difference in Funding Decision Based on the Growth Potential of the Company in Indonesia. Journal of Economic Development, Environment and People, 9(4), 23–37. https://doi.org/10.26458/jedep.v9i4.678

Issue

Section

Articles