Determinants of Debt Policy and Company’s Performance

Nardi Sunardi, T. Husain and A. Kadim

International Journal of Economics & Business Administration (IJEBA), 2020, vol. VIII, issue 4, 204-213

Abstract: Purpose: This research proposes to verify the determinant of debt policy, and company's performance consisting of business risk, asset growth, firm's size, and liquidity. Approach/Methodology/Design: The research has used quantitative analysis. Seven companies incorporated in retail trade listed on the Indonesian Stock Exchange from 2010-2019 fulfilled the requirements for sampling. Regression analysis was performed based on panel data analysis. Findings: The research shows that business risk and firm's size have a positive and significant effect on debt policy, whereas asset growth and liquidity have a positive and not significant effect on debt policy. Furthermore, overall determinant factors have a significant effect on company's performance, except liquidity, which has a significant negative effect. However, the determinant of debt policy and company performance have a significant influence on business risk, asset growth, firm's size, and liquidity. Practical Implications: The research will contribute to third parties and investors, especially providing funding sources to companies and investment decisions according to debt policy and company's performance. Originality/Value: The study believes to contribute positively to apprehend the importance of debt policy and the company's performance and add insight into financial studies, especially in the context of Indonesia.

Keywords: Company’s performance; debt policy; retail trade companies in Indonesia. (search for similar items in EconPapers)
JEL-codes: C33 G29 G32 N75 (search for similar items in EconPapers)
Date: 2020
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:viii:y:2020:i:4:p:204-213

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