Title: Capital structure active adjustment of Indonesian state-owned enterprises (SOEs)

Authors: Subiakto Soekarno; Edo Prayogo

Addresses: School of Business and Management, Institut Teknologi Bandung, Jalan Ganesha 10, Bandung, 40132, Indonesia ' School of Business and Management, Institut Teknologi Bandung, Jalan Ganesha 10, Bandung, 40132, Indonesia

Abstract: Indonesia's listed state-owned enterprises (SOEs) have relatively high dividend payout ratio compared to typical private enterprises because of the duty to fulfil government's budget SOEs may not put the priority to maximise public shareholder's value in the first place If the mission of maximising shareholders' value does not come at the priority, it is suspected that the managers of SOEs do not care about optimal capital structure target Recent research has found that Indonesia's listed SOEs adjust their leverage for as much as 45.65% toward the target However, it is still unknown whether the speed is caused by the active adjustment intentionally done by the awareness of the managers or by a passive adjustment which means that the managers do nothing regarding the leverage adjustment It is found that SOEs' managers are aware and do actively adjust the leverage toward the target with relatively slow adjustment.

Keywords: active adjustment; SOE; state-owned enterprise; capital structure; partial adjustment.

DOI: 10.1504/IJMEF.2018.093798

International Journal of Monetary Economics and Finance, 2018 Vol.11 No.3, pp.251 - 259

Available online: 23 Jul 2018 *

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