Title: Financing Preferences and Use of Funds for Manufacturing Companies Listed on the Indonesian Stock Exchange
Author: Denny Hardiko Harmasanto
Item Type : Thesis (Thesis)
Affiliations: Master of Management Science Study Program, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
This study aims to measure the company's financing preferences in accordance with the underlying asymmetry of information. PECKING ORDER theory explains the existence of a company financing hierarchy based on the sensitivity of securities information starting from internal funds followed by external funds. Measurement of financing preferences using the theoretical framework of funds and the use of funds. The source of funds consists of cash, debt and equity flows. The use of funds consists of working capital investment and capital expenditure, and R&D expenditure. Samples were taken from 113 manufacturing companies listed on the Indonesia Stock Exchange and data were obtained from company financial statements issued during 2012 - 2018. Analysis was carried out using multiple OLS regression by entering growth, tangible assets, leverage, cash reserves, profitability, company size and company age as control variables. The results of statistical testing show that working capital investment is positively and significantly influenced by cash flow financing. Capital expenditure is positively and significantly influenced by cash and debt financing while R&D Expenditure is positively and significantly influenced by debt financing. Robustness test results conducted by dividing the company's samples through high and low tangible asset ownership also provide results that support this finding and show statistical significance.
Keywords: Pecking order, Working capital investment, Capital expenditures, R&D Expenditure
