The Concept of Relationship Between Debt and Receivable: Evidence on Basic Industrial Companies in Indonesia
Abstract
The study's purpose was to determine whether there is a two-way influence between debt and receivables, the response of a variable to sShocks that occur in other variables and the contribution of each variable to other variables. Debt and receivable data are taken from 48 of the 91 companies in the basic industrial sector listed on the IDX. The statistical model used in this study is the Vector Autoregression Model, which aims to test the direction of influence between two variables. The results show that debt affects receivables, while accounts receivable do not affect debt. So there is only a one-way relationship between debt to receivables. This finding reinforced that the debt response to the shock in receivables did not find a significant response. Meanwhile, the response of receivables variable shock to itself since period 1 has fluctuated and has been stable since period 6. The receivables response to the shock in debt began to respond in the second period and was stable from period 6. The contribution of the receivable variable to itself had a negative trend. In contrast, the contribution of the variable debt to receivables shows a positive direction.
Keywords
Full Text:
PDFReferences
Aktan, B., Çelik, Ş., Abdulla, Y., & Alshakhoori, N. (2019). The impact of credit ratings on capital structure. ISRA International Journal of Islamic Finance, Volume 11 Issue 2, 226-245.
Allayannis, G., Brown, G. W., & Klapper, L. F. (2003). Capital Structure and Financial Risk: Evidence from Foreign Debt Use in East Asia. . The Journal of Finance, 58(6), 2667–2709.
Altunbaş, Y., Kara, A., & Marqués-Ibáñez, D. (2009). Large Debt Financing Syndicated Loans Versus Corporate Bonds. European Central Bank Working Paper series No 1028 / March 2009.
Bathala, C. T., Moon, K. P., & Rao, R. P. (1994). Managerial Ownership, Debt Policy, and the Impact of Institutional Holdings: An Agency Perspective. Financial Management, 23(3), 38–50.
Berger, A. N., & Udell, G. F. (1995). Relationship Lending and Lines of Credit in Small Firm Finance. . The Journal of Business, 68(3), 351–381.
Besson, J.-L., Dacorogna, M. M., Martin, P. d., Kastenholz, M., & Moller, M. (2009). Besson, JL., Dacorogna, M., Martin, P. et al. How Much Capital Does a Reinsurance Need?. Geneva Pap Risk Insur Issues Pract 34. The Geneva Papers on Risk and Insurance - Issues and Practice volume 34, 159–174 .
Clemente-Almendros, J. A., & Sogorb-Mira, F. (2018). Costs of debt, tax benefits and a new measure of non-debt tax shields: examining debt conservatism in Spanish listed firms,. Revista de Contabilidad, Volume 21, Issue 2, 162-175.
Cowton, C. J., & San-Jose, L. (2017). On the Ethics of Trade Credit: Understanding Good Payment Practice in the Supply Chain. Journal of Business Ethics 140, 673–685.
Haron, R. (2017). Ownership and Debt Financing: Indonesia Evidence. In I. G. Kucukkocaoglu, & S. Gokten, Financial Management from an Emerging Market Perspective. IntechOpen.
Hertina, D., Sumiyati, & Astama, L. P. (2020). Company Value Impact Funding Decisions, Investment Decisions And Dividend Policy. Palarch's Journal Of Archaeology Of Egypt/Egyptology 17(4), 3569-3576.
Holmstrom, B. (2015). Understanding the role of debt in the financial system. BIS Working Papers No 479.
Hunjra, A., Bakari, H., & Batool, I. (2018). Application of Financial Decisions, their Determinants, and Financial Performance: A Tabular Summary of Systematic Literature Review. Empirical Economic Review. 1, 89-140.
Ioannidou, V., Pavanini, N., & Peng, Y. (2022). Collateral and asymmetric information in lending markets. Journal of Financial Economics,Volume 144, Issue 1, 93-121.
John, K., Lynch, A. W., & Puri, M. (2003). Credit Ratings, Collateral, and Loan Characteristics: Implications for Yield. . The Journal of Business, 76(3), 371–409.
Liu, W. C. (2020). How Useful Is It for Banks to Analyze Financial Statements. American Journal of Industrial and Business Management, 10, 1488-1504.
Long, M. S., Malitz, I. B., & Ravid, S. A. (1993). Trade Credit, Quality Guarantees, and Product Marketability. . Financial Management, 22(4), 117–127.
Lucas, D. J., & McDonald, R. L. (1992). Bank Financing and Investment Decisions with Asymmetric Information about Loan Quality. . The RAND Journal of Economics, 23(1), 86–105.
Mehran, H., Taggart, R. A., & Yermack, D. (1999). CEO Ownership, Leasing, and Debt Financing. . Financial Management, 28(2), 5–14.
Merton, R. C. (1974). On the Pricing of Corporate Debt: The Risk Structure of Interest Rates. The Journal of Finance, 29(2), 449–470.
Michalski, G. (2008). A Portfolio Management Approach in Accounts Receivable Management. . South East European Journal of Economics and Business. 3, 89-96.
Morvinski, C., & Shani, Y. (2022). Misaligned mindsets between borrowers and lenders of small interpersonal loans. Organizational Behavior and Human Decision Processes, Volume 169.
Santos, J. P., Pires, A. M., & Fernandes, P. O. (2018). The importance to financial information in the decision-making process in company's family structure. Contaduría y Administración 63 (2), 1-23.
Setianto, R. H., & Pratiwi, A. (2019). Working Capital Management in Indonesia: An Analysis on Overinvestment and Underinvestment Firms. Gadjah Mada International Journal of Business, Vol. 21, No. 1 (Jan.-April 2019), 1-18.
Wasserman, N. (2008 ). The Founder's Dilemma. Harvard Business Review, February issue .
Winarno, W. W. (2013). Analisis Ekonometrika dan Statistika dengan Eviews. Yogyakarta: UPP STIM YKPN.
DOI: https://doi.org/10.17509/tjr.v5i1.50699
Refbacks
- There are currently no refbacks.
The International Journal Business Review (The Jobs Review) is licensed under a Creative Commons Attribution-ShareAlike 4.0
View My Stats