Capital structure determinants and the speed of adjustment towards capital structure target: evidence from Indonesian state-owned enterprises. (2016)

• Record Type: Journal Article
• Authors: Soekarno, Subiakto; Kitri, Mandra Lazuardi; Utomo, Suryo
• Is Part Of: International journal of monetary economics and finance. Volume 9:Number 4(2016)
• Page Start: 388
• Page End: 400
• Publication Date: 2016
• Subjects: static capital structure -- dynamic capital structure -- speed of adjustment -- SOEs -- state-owned enterprises -- Indonesia -- static modelling -- dynamic modelling -- generalised least squares -- GLS -- trade-off theory; Monetary policy -- Periodicals; Finance -- Periodicals; Economics -- Mathematical models -- Periodicals; 332.4
• Languages: English
• ISSNs: 1752-0479

Abstract

This paper provides the empirical evidence of the capital structure determinants and the speed of adjustment to reach the target in Indonesian state-owned enterprises (SOEs) during the period between 1995 and 2013. Using static and dynamic model with Generalised Least Squares estimation multiple regression technique, the result shows that Indonesian SOEs have their own capital structure determinants. The SOEs have a target capital structure following trade-off theory. The speed of adjustment towards capital structure target is 45.65% annually, which means that SOEs close two-third of the gap to their capital structure target within two years.