The Impact of Financial Distress on Cash Holdings in Indonesia: Does Business Group Affiliation Matter?

• 발행기관: 한국유통과학회
• 저자명: Michael HADJAAT Rizky YUDARUDDIN Sukisno Selamet RIADI
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.3, 373~381쪽, 전체 9쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.03.30

영문 초록

This study aims to investigate the impact of financial distress on the cash holding of non-financial companies in Indonesia as the largest emerging economy among ASEAN countries. Furthermore, the sub-sample business group to be investigated were divided into two, groups namely affiliated and non-affiliated groups. This was carried out to ascertain the difference in the impact of financial distress on cash holding between both groups. Sample collection was based on all firms listed on the Indonesian Stock Exchange (IDX) during 2008–2017, comprising 137 firms. The results showed that using the two-step system Generalized Method of Moments (GMM), the coefficients for financial distress (Z-Score) indices were positive and significant for all models. Therefore, the higher the Z-Score value, the lower the company’s financial distress and vice versa. This implies that the lower the company’s financial distress, the lower the cash holding. Furthermore, a positive and significant impact of the Z-Score on cash holding for non-affiliated groups was discovered. This implies that there are differences in the amount of cash holding between affiliated and non-affiliated groups. This result indicates that non-affiliated groups hold more cash during financial distress. However, these results had cash policy implications, particularly for non-affiliated groups.

목차

1. Introduction

2. Literature Review

3. Research Methods and Materials

4. Results and Discussion

5. Conclusions

References

키워드

Financial Distress Cash Holding Business Group Affiliates