Relationship between debt maturity and IPO: the case of Indonesian firms

Sarah Aulia Andriana and Yunieta Anny Nainggolan

Afro-Asian Journal of Finance and Accounting, 2020, vol. 10, issue 4, 464-479

Abstract: Initial public offering (IPO) is a big step in company life cycle as the time when company evolves from private to public firm by adding another source of financing. Studying the impact of IPO to debt maturity structure choices in Indonesia is important because debt maturity has an important role in emerging markets' macroeconomic condition. Based on literature review, it is expected for companies to take debt with longer maturity post-IPO for the benefits and accessibility. Company sample is taken from Indonesia Stock Exchange, using data of companies that have undergone IPO from 2008-2011. After analysis, it is found that one and two years after IPO, newly listed firms increase the use of long-term debt. Other statistically significant variables are firm's asset maturity, leverage, and growth opportunity. Result of this research would be an addition to Indonesia's financial literature and give insight of IPO's implication to Indonesian firms.

Keywords: Asian capital market; capital structure; debt maturity; financing; funding; going public; Indonesia market; initial public offering; IPO; leverage; liquidity risk. (search for similar items in EconPapers)
Date: 2020
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