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Testing of pecking order theory through the relationship: earnings, capital structure, dividend policy, and firmÂ’s value

Jurnal Keuangan dan Perbankan: Volume 16, Nomor 3, September 2012
Journal from JIPTUNMERPP / 2014-03-19 09:53:05
Oleh : Harmono, Diploma 3 of Finance and Banking Merdeka University Malang
Dibuat : 2012-09-01, dengan file

Keyword : Pecking order theory, earnings, capital structure, dividend policy, firmÂ’s value

This study aimed to test the pecking order theory through its correlation among earnings dimension, capital structure, dividend policy and firmÂ’s value perspective. By loading the correlation between dimension one to another, it indicated that management behaviour tended to retained earnings accumulation or to debt collection in financing the operation of the firm. The pecking order theory were tested when the management behaviour tended to retained earnings in accumulating sources of the fund equity rather than borrowing liabilities from creditors. Therefore, rationally if the capital structure was optimum, management tended to external financing until any trade off between earnings and debt financing. Based on the testing hypothesis, it indicated that the role of capital structure dimension had significance as intervening variable between earnings dimension and firmÂ’s value. On the other hand, the dividend policy had no significance to become intervening variable. Empirically, it could be concluded that the management behaviour in Indonesia tended to leverage rather than retained earnings accumulation in supporting the pecking order theory. Furthermore, the variable had the role to differentiate the characteristic of industries represented by the capital structure dimension, especially, debt to assest and to equity ratio.

Deskripsi Alternatif :

This study aimed to test the pecking order theory through its correlation among earnings dimension, capital structure, dividend policy and firmÂ’s value perspective. By loading the correlation between dimension one to another, it indicated that management behaviour tended to retained earnings accumulation or to debt collection in financing the operation of the firm. The pecking order theory were tested when the management behaviour tended to retained earnings in accumulating sources of the fund equity rather than borrowing liabilities from creditors. Therefore, rationally if the capital structure was optimum, management tended to external financing until any trade off between earnings and debt financing. Based on the testing hypothesis, it indicated that the role of capital structure dimension had significance as intervening variable between earnings dimension and firmÂ’s value. On the other hand, the dividend policy had no significance to become intervening variable. Empirically, it could be concluded that the management behaviour in Indonesia tended to leverage rather than retained earnings accumulation in supporting the pecking order theory. Furthermore, the variable had the role to differentiate the characteristic of industries represented by the capital structure dimension, especially, debt to assest and to equity ratio.

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PropertiNilai Properti
ID PublisherJIPTUNMERPP
OrganisasiD
Nama KontakDra. Wiwik Supriyanti, SS
AlamatJl. Terusan Halimun 11 B
KotaMalang
DaerahJawa Timur
NegaraIndonesia
Telepon0341-563504
Fax0341-563504
E-mail Administratorperpus@unmer.ac.id
E-mail CKOwsupriyanti@yahoo.com

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  • Editor: Wiwik Supriyanti, Dra. SS.