Moch Doddy Ariefianto, Irwan Trinugroho, Ahmad Erani Yustika, Wahyoe Soedarmono
We model and empirically estimate the relationship of ordinal scaled dependent variable: firm financing choice with business sophistication, revenue diversification and labor relationship using Indonesian data. We use controlling variables derived from Trade off Theory and Pecking Order Theory literature. We then elaborate the baseline model to include additional categoric variables of location and ownership, besides the interaction terms. The dataset is constructed from World Bank Enterprise Survey Year 2015 and Generalized logistic —partial proportional odds regression is employed as an estimator. We find that better business sophistication leads to greater acceptance to financing from outsiders and more diversified firms tend to prefer external financing. Finally, a better labor relationship corresponds to a greater preference for internal financing. EY P © 2020 Penerbit Universiti Kebangsaan Malaysia. All rights reserved.
Bina Nusantara University, Indonesia; Universitas Sebelas Maret, Indonesia; Universitas Brawijaya Institute for Development of Economics and Finance (INDEF), Indonesia; Sampoerna University, Indonesia; Faculty of Economics and Business, Universitas Sebelas Maret Jalan Ir, Sutami 36 A Surakarta, Central Java, Indonesia; Department of Economics, Faculty of Economics and Business, Brawijaya University, Institute for Development of Economics and Finance (INDEF), Jl. MT Haryono No. 165, Malang, 65145, Indonesia; Faculty of Business, Sampoerna University, L’Avenue Office, Jl. Raya Pasar Minggu Kav.16A Pancoran, Jakarta, 12780, Indonesia
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