DO STATE-OWNED ENTERPRISES OBTAIN LOWER COST OF DEBT? EVIDENCE FROM INDONESIA

• Main Author: Milano, Diva
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/57314
• Institution: Institut Teknologi Bandung

State-Owned Enterprises or SOEs is a significant economic player and approximately accounts for 20 percent of global investment, 5 percent of global employment, and up to 40 percent of output in some countries. In Indonesia, SOEs as the representation of government dominate and engage in strategic sectors and directly contribute to GDP and employment. But the performance of SOEs in Indonesia is still associated with improper management such as poor and inefficient governance. In latest years, efficiency and restructuration of SOEs continue to be carried out but currently, several SOEs are struggling to avoid the threat of bankruptcy due to the uncontrollable debt and negative equity. Unfortunately, there isn’t much paper that discusses the SOEs and capital structure-related topics, especially in debt financing. Thus, this research aims to fill the gap and investigate the influence of state ownership of SOEs on the cost of debt in Indonesia. The sample from this research is all bonds issued from the non-financial public company that listed in Indonesia Stock Exchange and rated by Pemeringkat Efek Indonesia in 2017, 2018, and 2019. The sample is tested by Multiple Linear Regression with the cost of debt as the dependent variable. The result indicates that the SOEs in Indonesia will obtain a lower cost of debt compared to the non-SOEs. Moreover, this study also reveals some factors that could influence the cost of debt in Indonesia. Through the result from this study, this research could present a new insight into corporate finance topic regarding capital structure decision of SOEs in Indonesia.