Asymmetric Information and Capital Structure: Empirical Evidence from Indonesia Stock Exchange

Authors

  • Mustaruddin Mustaruddin Universitas Tanjungpura
  • Aristya Dinata
  • Wendy Wendy
  • Anwar Azazi

Abstract

This study is aimed to scrutinize the impact of asymmetric information on capital structure in Indonesia by taken the sample from firms listed in IDX with total of 225 observations.  The capital structure is measured by Leverage (LEV) and the asymmetric information is measured by Amihud Illiquidity ratio (ILLQ) and firm size measured by book value of total assets (SIZE). In addition, two controlling variable of Altman Z-Score (ALT) and gross domestic product (GDP) are added. The data is analyzed by using multiple regressions with random effect panel data estimation. The results find that the impact of asymmetric information on capital structure is consistent before and after including controlling variables. The evidence is not robust to the inclusion of illiquidity ratio, whereas firm size is important in explaining on capital structure before and after including controlling variables.

Keywords: Capital Structure, Asymmetric Information, Amihud Illiquidity, Firm Size, Altman Z-Score, Gross Domestic Product

JEL Classification: G320

Downloads

Download data is not yet available.

Author Biography

Mustaruddin Mustaruddin, Universitas Tanjungpura

Faculty of Economics and Business (FEB), Department of Management,

Downloads

Published

2017-12-09

How to Cite

Mustaruddin, M., Dinata, A., Wendy, W., & Azazi, A. (2017). Asymmetric Information and Capital Structure: Empirical Evidence from Indonesia Stock Exchange. International Journal of Economics and Financial Issues, 7(6), 8–15. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/4956

Issue

Section

Articles