Militarily Connected Firm, Thin Capitalization Policy, And Debt To Equity Ratio

• Main Author: Gery Lusiano Firmansah, -
• Format: Theses and Dissertations NonPeerReviewed
• Language: English; English; English; English; English; English; English; English; English
• Published: 2021
• Subjects: K1000-1395 Commercial law
• Online Access: http://repository.unair.ac.id/108622/1/1.%20COVER.pdf; http://repository.unair.ac.id/108622/2/2.%20ABSTRACT.pdf; http://repository.unair.ac.id/108622/3/3.%20CHAPTER%201.pdf; http://repository.unair.ac.id/108622/4/4.%20CHAPTER%202.pdf; http://repository.unair.ac.id/108622/5/5.%20CHAPTER%203.pdf; http://repository.unair.ac.id/108622/6/6.%20CHAPTER%204.pdf; http://repository.unair.ac.id/108622/7/7.%20REFERENCES.pdf; http://repository.unair.ac.id/108622/8/8.%20APPENDIX.pdf; http://repository.unair.ac.id/108622/9/Permohonan%20Embargo.pdf; http://repository.unair.ac.id/108622/; http://www.lib.unair.ac.id
• Institution: Universitas Airlangga

This study aims to examine the association militarily connected firm, thin capitalization policy, and debt to equity ratio using a sample of 1039 from 394 firm-year observations listed on the IDX on period 2012 - 2019. Testing carries out by multiple linear regression through STATA 14.0. The results show that the militarily connected firm has significantly positive association with debt to equity ratio. This indicates that firms with military connection have a higher debt to equity ratio than firms without military connection. This study also finds that militarily background director has significantly positive association with debt to equity ratio. This indicates that militarily background director tend to use debt financing intensively. After the existence thin capitalization policy, the PMK 169 / PMK.010 / 2015 weakens the association between militarily background director and debt to equity ratio. This study contributes to the academic literature on militarily connected firm, thin capitalization policy, and debt to equity ratios. In addition, this research is also expected to be able to contribute to firm in determining the optimum debt policy decision through director appointment. The limitation in this study is that the resources of military connection proxy only from board profile in annual report