IMPACT OF COVID-19 TO CAPITAL STRUCTURE OF INDONESOAN AUTOMOTIVE AND COMPONENT INDUSTRY LISTED ON INDONESIAN STOCK EXCHANGE (IDX

• Main Author: Cliff Setiawan, Antonius
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/57322
• Institution: Institut Teknologi Bandung

For a company to maximize its value the company needs to find the capital structure, capital structure is a combination of debt and equity of a company. Indonesia is ASEAN's second-largest automotive producer and consumer and plays an important role in Indonesia’s economy, but the COVID-19 pandemic, this viral disease managed to halt the progress of Indonesia’s economy and severely affecting the automotive industry. For the automotive industry to survive this situation there's a need to find the correlation of COVID-19 pandemic and the industry capital structure and how to maximize it. To find the optimal capital structure, we compare the historical data of each company capital structure to find the impact of COVID-19 on the current capital structure, then we use the Adjusting Present Value approach by Aswath Damodaran to find the optimal capital structure. By determining the impact of COVID-19 and the optimal capital structure we could use this result so the company in the automotive industry can adapt to a future crisis such as the COVID-19 pandemic. From comparing past data we find out that COVID-19 didn’t affect the company debt level, and subsequently the company’s capital structure, next we can use the 2020 data to find the optimal capital structure for each company, in which we found 7 companies are over-levered and 3 company are underlevered, for the over-levered it is suggested to use retained earnings, cut the dividend payment or issuing new equity to pay the debt. For the under-levered company, it’s suggested to use more debt for a new project or to pay more dividends, or to buy back some of the shares.