<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Intra-industry sectors are producers of asymmetric information, which in turn has an impact on capital structure decisions. The purpose of this study was to determine (1) differences in debt-equity ratio, growth opportunities, firm age, and firm size as firm characteristics and (2) differences in the effect of growth opportunities, firm age, and firm size on the debt-equity ratio between manufacturing and nonmanufacturing firms. We collected 3,063 observation units consisting of 2,628 manufacturing sectors and 435 non-manufacturing sectors in the Indonesia Stock Exchange (IDX) and trimmed the data to eliminate the top and bottom 20%. Manufacturing firms are older and more stable, using their profitability to increase information disclosure. Although they produce lower asymmetric information, they do not prefer external financing as an effort to reduce intervention. In contrast, non-manufacturing firms have less tangible assets as a proportion of their total assets than manufacturing firms and therefore produce less asymmetric information of intrinsic value (tangible assets). As a result, manufacturing firms prefer debt issues over equity issues when financing new investments.</p>
</abstract>

Intra-industry sectors are producers of asymmetric information, which in turn has an impact on capital structure decisions. The purpose of this study was to determine (1) differences in debt-equity ratio, growth opportunities, firm age, and firm size as firm characteristics and (2) differences in the effect of growth opportunities, firm age, and firm size on the debt-equity ratio between manufacturing and nonmanufacturing firms. We collected 3,063 observation units consisting of 2,628 manufacturing sectors and 435 non-manufacturing sectors in the Indonesia Stock Exchange (IDX) and trimmed the data to eliminate the top and bottom 20%. Manufacturing firms are older and more stable, using their profitability to increase information disclosure. Although they produce lower asymmetric information, they do not prefer external financing as an effort to reduce intervention. In contrast, non-manufacturing firms have less tangible assets as a proportion of their total assets than manufacturing firms and therefore produce less asymmetric information of intrinsic value (tangible assets). As a result, manufacturing firms prefer debt issues over equity issues when financing new investments.

Asymmetric Information in New Investment: Evidence in Indonesia

Foundations of Management

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

{"article-title":"Asymmetric Information in New Investment: Evidence in Indonesia"}

Intra-industry sectors are producers of asymmetric information, which in turn has an impact on capital structure decisions. The purpose of this study was to...

Manufacturing	All Firm	Manufacturer	Non Manufacturer
N Observation	3063	435	2628
Intercept	-0.182	-0.149	-0.188
Sales Growth	-0.000	-0.001	-0.000
Size	0.047*	0.043	0.048*
Age	-0.016	0.006	-0.016
Growth*sector	-0.001	-	-
Size*sector	-0.003	-	-
Age*Sector	0.023	-	-
R Square	0.00538	0.007	0.00863
F Test	4.382	1.090	7,614
p-value	0.000*	0.352	0.000*

	Sales Growth	Size	age	DER
Sales Growth	1	-	-	-
Size	0.026	1	-	-
age	0.007	0.049	1	-
DER	-0.002	0.090	-0.006	1

-	Count	mean	median	Std Dev	Kurtosis	Skewness	Q1	median	Q3	Mean Diff
Panel A
Sales Growth	3063	1.553	0.084	32,692	960.558	30,381	-0.037	0.084	0.226	-0.715
Size	3063	28,521	28,499	1,708	0.351	0.006	27.371	28,499	29,661	-0.135
age	3063	2,739	2,944	0.675	0.658	-1.029	2,303	2,944	3.258	0.245*
DER	3063	1.133	0.883	0.882	1,880	1.413	0.470	0.883	1.535	-0.020
Panel B-
Non Manufacturing
Sales Growth	2628	1,655	0.086	34,851	864,931	29,022	-0.036	0.086	0.236	-
Size	2628	28,540	28,532	1,704	0.157	-0.065	27,389	28,532	29,703	-
age	2628	2,704	2,890	0.674	0.547	-0.950	2.197	2,890	3.258	-
DER	2628	1.136	0.886	0.879	1,814	1.397	0.473	0.886	1.539	-
Manufacturing
Sales Growth	435	0.940	0.074	13.717	418,632	20,295	-0.039	0.074	0.170	-
Size	435	28,405	28,408	1,730	1.618	0.421	27.168	28,408	29,370	-
age	435	2,949	3.219	0.644	2,508	-1,715	2,639	3.219	3,401	-
DER	435	1.116	0.857	0.902	2.289	1,508	0.446	0.857	1.518	-

Asymmetric Information in New Investment: Evidence in Indonesia

Published Online: Nov 21, 2023

Page range: 177 - 186

DOI: https://doi.org/10.2478/fman-2023-0013

Keywords
asymmetric information, pecking order theory, debt and equity

© 2023 Arief Yulianto et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Regression Results (Source: Annual report from IDX from 2008 – 2019, analyzed.)

Correlation Matrix (Source: Annual report from IDX from 2008 – 2019, analyzed.)

Descriptive Statistics (Source: Annual report from IDX from 2008 – 2019, analyzed.)

Asymmetric Information in New Investment: Evidence in Indonesia

Published Online: Nov 21, 2023

Page range: 177 - 186

DOI: https://doi.org/10.2478/fman-2023-0013

Keywordsasymmetric information, pecking order theory, debt and equity

© 2023 Arief Yulianto et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Regression Results (Source: Annual report from IDX from 2008 – 2019, analyzed.)

Correlation Matrix (Source: Annual report from IDX from 2008 – 2019, analyzed.)

Descriptive Statistics (Source: Annual report from IDX from 2008 – 2019, analyzed.)

Keywords
asymmetric information, pecking order theory, debt and equity