The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market
Abstract Purpose – This study aims to evaluate the impact of firm, industry level determinants and ownership concentration on the dynamic capital structure decision in Indonesia and analyses the governing theories. Design/methodology/approach – This study uses the dynamic panel model of generali...
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my.iium.irep.916402021-12-14T07:14:37Z http://irep.iium.edu.my/91640/ The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market Haron, Razali Nomran, Naji Abdullah Othman, Anwar Hasan Md Husin, Maizaitulaidawati Sharofiddin, Ashurov HG Finance HG4001 Financial management. Business finance. Corporation finance. Abstract Purpose – This study aims to evaluate the impact of firm, industry level determinants and ownership concentration on the dynamic capital structure decision in Indonesia and analyses the governing theories. Design/methodology/approach – This study uses the dynamic panel model of generalized method of moments-System (one-step and two-step) by using a panel data from 2000 to 2014 to examine the relationship between the determinants and leverage. The results are robust to the various definitions of leverage, heterogeneity, autocorrelation, multicollinearity and endogeneity concern. Findings – Growing firms and firms operating in a highly concentrated industry use high level of debt, taking advantage of the tax shield (trade-off theory). However, if the firms are operating in a highly dynamic environment, they take on less debt as to avoid bankruptcy risk. Firms in Indonesia opt for debt financing perhaps to act as a controlling mechanism to mitigate agency conflicts that may exist between the large controlling shareholders and the minority. Aged and highly profitable firms with high tangible and intangible assets and liquidity level operating in a high dynamic environment follow the pecking order theory. Research limitations/implications – This study does not perform each industry regression individually. All the industries are pooled together, as the main focus of this study is to examine the factors affecting leverage of firms in general without giving particular attention to individual industry. Originality/value – The insights on the impact of ownership concentration and industry characteristics are novel especially on Indonesia, thus fill the gap in the literature. Emerald 2021-08-16 Article PeerReviewed application/pdf en http://irep.iium.edu.my/91640/13/91640%20-%20The%20influence%20of%20firm%2C%20industry%20and%20concentrated%20ownership..._Scopus.pdf application/pdf en http://irep.iium.edu.my/91640/19/91640_The%20influence%20of%20firm%2C%20industry%20and.pdf Haron, Razali and Nomran, Naji and Abdullah Othman, Anwar Hasan and Md Husin, Maizaitulaidawati and Sharofiddin, Ashurov (2021) The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market. Journal Asia Business Studies, 15 (5). pp. 669-709. ISSN 1558-7894 E-ISSN 1559-2243 https://www.emerald.com/insight/content/doi/10.1108/JABS-04-2019-0109/full/html?skipTracking=true DOI 10.1108/JABS-04-2019-0109 |
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HG Finance HG4001 Financial management. Business finance. Corporation finance. Haron, Razali Nomran, Naji Abdullah Othman, Anwar Hasan Md Husin, Maizaitulaidawati Sharofiddin, Ashurov The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market |
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Abstract
Purpose – This study aims to evaluate the impact of firm, industry level determinants and ownership
concentration on the dynamic capital structure decision in Indonesia and analyses the governing
theories.
Design/methodology/approach – This study uses the dynamic panel model of generalized method of
moments-System (one-step and two-step) by using a panel data from 2000 to 2014 to examine the
relationship between the determinants and leverage. The results are robust to the various definitions of
leverage, heterogeneity, autocorrelation, multicollinearity and endogeneity concern.
Findings – Growing firms and firms operating in a highly concentrated industry use high level of debt,
taking advantage of the tax shield (trade-off theory). However, if the firms are operating in a highly
dynamic environment, they take on less debt as to avoid bankruptcy risk. Firms in Indonesia opt for debt
financing perhaps to act as a controlling mechanism to mitigate agency conflicts that may exist between
the large controlling shareholders and the minority. Aged and highly profitable firms with high tangible
and intangible assets and liquidity level operating in a high dynamic environment follow the pecking order
theory.
Research limitations/implications – This study does not perform each industry regression individually.
All the industries are pooled together, as the main focus of this study is to examine the factors affecting
leverage of firms in general without giving particular attention to individual industry.
Originality/value – The insights on the impact of ownership concentration and industry characteristics
are novel especially on Indonesia, thus fill the gap in the literature. |
format |
Article |
author |
Haron, Razali Nomran, Naji Abdullah Othman, Anwar Hasan Md Husin, Maizaitulaidawati Sharofiddin, Ashurov |
author_facet |
Haron, Razali Nomran, Naji Abdullah Othman, Anwar Hasan Md Husin, Maizaitulaidawati Sharofiddin, Ashurov |
author_sort |
Haron, Razali |
title |
The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market |
title_short |
The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market |
title_full |
The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market |
title_fullStr |
The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market |
title_full_unstemmed |
The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market |
title_sort |
influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market |
publisher |
Emerald |
publishDate |
2021 |
url |
http://irep.iium.edu.my/91640/13/91640%20-%20The%20influence%20of%20firm%2C%20industry%20and%20concentrated%20ownership..._Scopus.pdf http://irep.iium.edu.my/91640/19/91640_The%20influence%20of%20firm%2C%20industry%20and.pdf http://irep.iium.edu.my/91640/ https://www.emerald.com/insight/content/doi/10.1108/JABS-04-2019-0109/full/html?skipTracking=true |
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13.154949 |