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

Author: Mukhammad Idrus

Item Type : Thesis (Thesis)

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

Publisher: Universitas Airlangga

 

Abstract

 

Moldigiani Miller (MM) theory concludes that there is a separation between investment decisions and financing decisions. However, in the real (empirical) world, it is realized that the relaxation of the assumptions of MM theory gives rise to the conclusion that there is a relationship between investment and financing decisions. This research 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 reports (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 Jakarta Stock Exchange classification. The analytical tool used in this research is canonical correlation. Canonical correlation analysis is used because what is being studied includes the correlation between two groups of investment variables and a group 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 Liabilities, (Y3) Long Term Debt and (Y4) Equity. This analysis tool requires several testing stages and two assumption tests, namely the normality assumption and the linearity assumption. The normality test was carried out using the Kolmogorov-Smirnov test, while the linearity test was carried out using the Anova test tool in SPSS. The results of the Linearity test resulted in 15 relationships that met the linearity requirements and one that did not, namely the relationship between Y3 and X4. However, overall the relationship between variables meets the linearity requirements. In the Kolmogorov-Smirnov test, the Wilks Lambda and PillaiTrace significance values ​​were 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 research meets the requirements for 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 in the balance sheet, namely the relationship between the inventory variable (X3) and accounts payable (Y1). Meanwhile, the results of the other three relationships were negative (there was no relationship). Thus, this understanding is different from previous research which stated that there were four relationships in the balance sheet

 

Keywords: CANONICAL CORRELATION, LINEARITY, NORMALITY

 

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