The role of business sophistication, revenue diversification, and labor relations on firm financing choice
We model and empirically estimate the relationship of ordinal scaled dependent variable: firm financing choice with business sophistication, revenue diversification and labor relationship using Indonesian data. We use controlling variables derived from Trade off Theory and Pecking Order Theory l...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2020
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| Online Access: | http://journalarticle.ukm.my/17083/1/jeko_54%283%29-8.pdf http://journalarticle.ukm.my/17083/ https://www.ukm.my/fep/jem/content/2020-3.html |
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| Summary: | We model and empirically estimate the relationship of ordinal scaled dependent variable: firm financing choice with
business sophistication, revenue diversification and labor relationship using Indonesian data. We use controlling
variables derived from Trade off Theory and Pecking Order Theory literature. We then elaborate the baseline model
to include additional categoric variables of location and ownership, besides the interaction terms. The dataset is
constructed from World Bank Enterprise Survey Year 2015 and Generalized logistic —partial proportional odds
regression is employed as an estimator. We find that better business sophistication leads to greater acceptance to
financing from outsiders and more diversified firms tend to prefer external financing. Finally, a better labor relationship
corresponds to a greater preference for internal financing. |
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