ANALYSIS OF THE RELATIONSHIP BETWEEN TYPES OF FINANCING AND TYPES OF INVESTMENT IN GO PUBLIC MANUFACTURING COMPANIES ON THE JAKARTA STOCK EXCHANGE

Amount: ANALYSIS OF THE RELATIONSHIP BETWEEN TYPES OF FINANCING AND TYPES OF INVESTMENT IN GO PUBLIC MANUFACTURING COMPANIES ON THE JAKARTA STOCK EXCHANGE

Authors: Muhammad Idrus

Item Type: Thesis

Memberships: Master of Management Study Program, Faculty of Economics and Business Universitas Airlangga Surabaya, Indonesia

Publisher: Airlangga University

Abstract

The theory of Moldigiani Miller (MM) concludes that there is a separation between investment decisions and financing decisions. However, in the real world (empirical) it is realized that the loosening of assumptions on the MM theory leads to the conclusion that there is a relationship between investment and financing decisions. This study aims to identify the relationship between the two sides of the balance sheet which is a manifestation of investment and financing decisions at the company level. The sample was taken by cross section from the 1998 financial statements (balance sheet) of manufacturing companies that went public through the Jakarta stock exchange. The sample consists of 105 manufacturing companies from various industrial groups according to the classification of the Jakarta Stock Exchange. The analytical tool used in this research is canonical correlation. The canonical correlation analysis is used because what is being studied includes the correlation between two groups of investment variables and groups of financing variables. The investment variable group includes (X1) Cash and securities, (X2) Accounts Receivable, (X3) Inventory and (X4) Long-Term Assets, while the financing variable group includes (Y1) Accounts Payable, (Y2) Other Current Payables, (Y3) Long-Term Debt and (Y4) Equity. This analysis tool requires that there are several stages of testing and two testing assumptions, namely the assumption of normality and the assumption of linearity. The normality test was carried out using the Kolmogorov-Smirnov test while the linearity test was carried out using the Anova test tool on SPSS. Linearity test results produce 15 relationships that meet the requirements of linearity and one that does not, namely the relationship between Y3 and X4. But overall (overall) the relationship between variables meets the requirements of linearity. In the Kolmogorov-Smirnov test, the significance value of Wilks Lambda and PillaiTrace is 0.001. This value is still below the research significance of 5% or 0.005. This means that the use of canonical correlation in this study has met the requirements of normality and linearity. From the results of the canonical correlation, it is found that there is one relationship out of four possible relationships that are assumed to exist on the balance sheet, namely the relationship between the inventory variable (X3) and trade payables (Y1). While the other three relationships are negative (no relationship). Thus this research is different from previous research which states that there are four relationships on the balance sheet

Keywords: CANONICAL CORRELATION, LINEARITY, NORMALITY

sources: http://repository.unair.ac.id/34829/