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 research aims to measure company financing preferences according to the underlying information asymmetry. The pecking order theory explains the existence of a corporate financing hierarchy based on the sensitivity of securities information starting from internal funds followed by external funds. Measuring financing preferences uses a theoretical framework of sources of funds and use of funds. Sources of funds consist of cash flow, debt and equity. 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 was obtained from company financial reports published during 2012 - 2018. Analysis was carried out using multiple OLS regression by including growth, tangible assets, leverage, cash reserves, profitability, company size and age. company as a control variable. Statistical test results show that working capital investment is positively and significantly influenced by cash flow financing. Capital expenditure is positively and significantly influenced by cash flow and debt financing, while R&D expenditure is positively and significantly influenced by debt financing. The results of the robustness test carried out by dividing the sample companies by high and low ownership of tangible assets also provide results that support these findings and show statistical significance.
Keywords: Pecking order, Working capital investment, Capital expenditures, R&D Expenditure
