Growth Opportunities Utilization: Debt Overhang or Asymmetric Information?

Martono S. (), Yulianto Arief () and Wijaya Angga Pandu ()
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Martono S.: Universitas Negeri Semarang, Faculty of Economics, Department of Management, INDONESIA
Yulianto Arief: Universitas Negeri Semarang, Faculty of Economics, Department of Management, INDONESIA
Wijaya Angga Pandu: Universitas Negeri Semarang, Faculty of Economics, Department of Management, INDONESIA

Foundations of Management, 2021, vol. 13, issue 1, 171-182

Abstract: Inter-industry has various capital structures to take advantage of growth opportunities due to agency differences and information asymmetric problems. This research aims to analyze: (1) the differences in leverage between industries and (2) the impact of shareholders–debtholders conflict and information asymmetric on growth opportunities. The firm-level data used is extracted from Indonesia Stock Exchange's annual reports from 2008 to 2019. Authors used the analysis of variance (ANOVA). The findings show differences in leverage between industries. However, they are relatively stable and not excessive for assets to prevent conflicts between managers and shareholders with debtholders. Equity is also not used to utilize growth to reduce the discretionary power (dilution) of shareholders. As a result, the use of opportunities and growth is limited. This study identifies agency problems and asymmetric information that determines independent companies' decisions in exploiting growth opportunities.

Keywords: independent company; agency problem; information asymmetric (search for similar items in EconPapers)
JEL-codes: G24 G30 G32 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:founma:v:13:y:2021:i:1:p:171-182:n:9

DOI: 10.2478/fman-2021-0013

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