Financial Constraint dan Sensitivitas Pembiayaan Eksternal Terhadap Aliran Kas
DOI:
https://doi.org/10.24127/akuisisi.v20i1.1207Keywords:
Capital structure, cash flow, external financing, financial constraint, Pecking orderAbstract
Based on the pecking order theory, companies prefer internal funding sources over external (debt and equity) due to information asymmetry problems (d.k.l., financial constraints). However, this theory does not anticipate that external financing components may respond differently to cash flows. This research replicates a study conducted by Park (2019) to examine the influence of cash flow on external funding components and the sensitivity of external funding to cash flow which is moderated by financial constraints in the Indonesian context. This research is a quantitative study that observed 978 financial data of public companies in Indonesia during 2016-2019 and analyzed using ordinary least squares. This research finds that cash flow is negatively related to external funding, except for long-term debt and equity, the substitution between internal funding and debt is carried out using short-term debt, and the sensitivity of external funding to cash flow is stronger for companies with funding without constraints. This research concludes that the agency problem is not the sole factor in determining funding decisions for future study companies to expand the observation year and use other financial constraint criteria such as bonds and commercial paper ratings.
References
Allini, A., Rakha, S., McMillan, D. G., & Caldarelli, A. (2018). Pecking order and market timing theory in emerging markets: The case of Egyptian firms. Research in International Business and Finance, 44, 297–308. https://doi.org/10.1016/j.ribaf.2017.07.098
Almeida, H., & Campello, M. (2010). Financing Frictions and the Substitution between Internal and External Funds. Journal of Financial and Quantitative Analysis, 45(3), 589–622. https://doi.org/10.1017/S0022109010000177
Arugaslan, O., & Miller, L. (2006). On the Conditioning of the Financial Market’s Reaction to Seasoned Equity Offerings. The Lahore Journal Of Economics, 11(2), 141–154. https://doi.org/10.35536/lje.2006.v11.i2.a8
Baños-Caballero, S., GarcÃa-Teruel, P. J., & MartÃnez-Solano, P. (2014). Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67(3), 332–338. https://doi.org/10.1016/j.jbusres.2013.01.016
BPS, B. P. S. (2017). Posisi Kredit Investasi Perbankan Menurut Sektor Ekonomi. Https://Www.Bps.Go.Id/Indicator/13/633/5/Posisi-Kredit-Investasi-Perbankan-Menurut-Sektor-Ekonomi-Format-Baru-.Html.
BPS, B. P. S. (2019). Posisi Kredit Investasi Perbankan Menurut Sektor Ekonomi. Https://Www.Bps.Go.Id/Indicator/13/633/3/Posisi-Kredit-Investasi-Perbankan- Menurut-Sektor-Ekonomi-Format-Baru-.Html.
Chay, J. B., Park, S. H., Kim, S., & Suh, J. (2015). Financing hierarchy: Evidence from quantile regression. Journal of Corporate Finance, 33, 147–163. https://doi.org/10.1016/j.jcorpfin. 2015.06.004
Cleary, S. (1999). The Relationship between Firm Investment and Financial Status. The Journal of Finance, 54(2), 673–692. http://www.jstor.org/stable/2697723
Denis, D. J., & McKeon, S. B. (2012). Debt Financing and Financial Flexibility Evidence from Proactive Leverage Increases. The Review of Financial Studies, 25(6), 1897–1929.
Eriotis, N., Vasiliou, D., & Ventouraâ€Neokosmidi, Z. (2007). How firm characteristics affect capital structure: an empirical study. Managerial Finance, 33(5), 321–331. https://doi.org/10.1108/ 03074350710739605
Fazzari, S. M., Hubbard, R. G., Petersen, B. C., Blinder, A. S., & Poterba, J. M. (1988). Financing Constraints and Corporate Investment. Brookings Papers on Economic Activity, 1988(1), 141. https://doi.org/10.2307/2534426
Kaplan, S. N., & Zingales, L. (1997). Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints? The Quarterly Journal of Economics, 112(1), 169–215. https://www.jstor.org/stable/2951280
Kim, T.-N. (2014). The impact of cash holdings and external financing on investment-cash flow sensitivity. Review of Accounting and Finance, 13(3), 251–273. https://doi.org/https://doi.org/ 10. 1108/RAF-09-2012-0080
Kumar, S., Colombage, S., & Rao, P. (2017). Research on capital structure determinants: a review and future directions. International Journal of Managerial Finance, 13(2), 106–132. https://doi.org/10.1108/IJMF-09-2014-0135
López-Gracia, J., & Sogorb-Mira, F. (2014). Sensitivity of external resources to cash flow under financial constraints. International Business Review, 23(5), 920–930. https://doi.org/10.1016 /j.ibusrev.2014.02.004
Margaritis, D., & Psillaki, M. (2010). Capital structure, equity ownership and firm performance. Journal of Banking & Finance, 34(3), 621–632. https://doi.org/10.1016/j.jbankfin.2009.08.023
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221. https://doi.org/10.1016/0304-405X(84)90023-0
Ozkan, A. (2001). Determinants of Capital Structure and Adjustment to Long Run Target: Evidence From UK Company Panel Data. Journal of Business Finance & Accounting, 28(1–2), 175–198. https://doi.org/10.1111/1468-5957.00370
Park, J. (2019). Financial constraints and the cash flow sensitivities of external financing: Evidence from Korea. Research in International Business and Finance, 49, 241–250. https://doi.org/10.1016/j.ribaf.2019.03.007
Rashid, A., & Jabeen, N. (2018). Financial frictions and the cash flow – external financing sensitivity: evidence from a panel of Pakistani firms. Financial Innovation, 4(1), 15. https://doi.org/10.1186/s40854-018-0100-6
Seifert, B., & Gonenc, H. (2010). Pecking Order Behavior in Emerging Markets . Journal of International Financial Management & Accounting, 21(1), 1–31. https://doi.org/10.1111/j. 1467-646X.2009.01034.x
Tandya, C. (2015). The Capital Structure Determinants of Indonesia Publicly Listed Firms. IBuss Management, 3(2), 19–27.
Yıldırım, D., & Çelik, A. K. (2021). Testing the pecking order theory of capital structure: Evidence from Turkey using panel quantile regression approach. Borsa Istanbul Review, 21(4), 317–331. https://doi.org/10.1016/j.bir.2020.11.002
Downloads
Published
How to Cite
Issue
Section
License
This journal provides immediate open access to its content on the principle that making research freely available to the public supports a greater global exchange of knowledge.
All articles published Open Access will be immediately and permanently free for everyone to read and download. We are continuously working with our author communities to select the best choice of license options, currently being defined for this journal as follows:
