MANAGERIAL OPTIMISM AND DEBT FINANCING: CASE STUDY ON INDONESIA MANUFACTURING LISTED FIRMS

Gesti Memarista

Abstract


Managerials psychology can affect financial decision in the company. This paper analyzes the influence of managerial optimism on the debt financing by using regression analysis. The dependent variable in this paper is debt financing. The independent variable is managerial optimism and the control variable are firm value, firm size, and firm performance that are occurred in the previous period. The sample used in this study is manufacturing companies that listed in Indonesian stock exchange during 2010-2014. The result on this study shows that managerial optimism, firm value, and firm size that are occurred in the previous period have positive significantly impact on debt financing, whereas firm performance in the previous period has negative significantly impact on debt financing.

Keywords


Managerial Optimism, Debt Financing, Firm Value, Frim Size, Firm Performance

Full Text:

pdf

References


Ackert, L. & Deaves, R. 2010. Behavioral Finance: Psychology, Decision-Making, and Markets. First Edition. South Western College.

American Psychological Association. 2013. Glossary of Psychological Terms. Retrieved 02 January 2016, from http://www.apa.org/research/action/glossary.aspx.

Brigham, E. F. & Daves, P. R. 2009. Intermediate Financial Management. Tenth Edition. South-Western: Cengage Learning.

DeAngelo, H., DeAngelo, L. & Whited, T. M. 2008. Capital Structure Dynamics and Transitory Debt. Retrieved 02 February 2016, from http://ssrn.com/abstract=1262464.

Frank, M. 1988. An Intertemporal Model of Industrial Exit, Quarterly Journal of Economics, 103(2): 333-44.

Frank, M. Z. & Goyal, V. K. 2003. Capital Structure Decisions: Which Factors Are Reliably Important?. Retrieved 1 Januari 2016 from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.203.4822&rep=rep1&type=pdf

Fraser, S. & Greene, F. 2006. The Affect of Experience on Entrepreneurial Optimism And Uncertainty, Economica, 73(290): 169-92.

Gertler, M. & Gilchrist, S. 1994. Monetary Policy, Business Cycle, and the Behaviour Of Small Manufacturing, Quarterly Journal of Economics, 109: 309-341.

Glaser, M., and Weber, M. 2007. Overconfidence and Trading Volume, Geneva Risk and Insurance Review, 32(1): 1-36.

Hackbart, D. 2008. Managerial Traits and Capital Structure Decisions, Journal of Financial and Qualitative Analysis, 32(3): 269-286.

Heaton, J. B. 2002. Managerial Optimism and Corporate Finance, Financial Management Journal, 31: 33-45.

Jensen, M. C., & Meckling, W. H. 1976. Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure, Journal of Financial Economics, 3(4): 305-360.

Kumar, K. B., Rajan, R. G. & Zingales, L. 2001. What Determines Firm Size?, Retrieved 04 March 2016 from http://faculty.chicagobooth.edu/finance/papers/size.pdf

Malmendier, U. & Tate, G. 2005. Does Overconfidence Affect Corporate Investment? CEO Overconfidence Measures Revisited, European Financial Management Journal, 11(5): 649-659.

Malmendier, U. & Tate, G., 2005b. Who Makes Acquisitions? CEO Overconfidence and the Markets Reaction. Working Paper. Stanford University.

Malmendier, U. & Tate, G. 2008. Who Makes Acquisitions? CEO Overconfidence and The Markets Reaction, Journal of Finance Economics, 89: 20-43.

March, J. & Sharpia, Z. 1987. Managerial Perspectives on Risk and Risk Taking. Management Science, 33: 14041418.

Meggison, W. L. 1997. Capital Finance Theory. Addison-Wesley. PP 1-506. ISBN 0673997650, 9780673997654

Miller, M. H. 1977. Debt and Taxes, Journal of Finance. 261-275.

Moeljadi, & Supriyati, T. S. 2014. Factors Affecting Firm Value: Theoretical Study on Public Manufacturing Firms in Indonesia, South East Asia Journal of Contempporary Business, Economiics, and Law. 15(2): 6-15.

Myers, S. C. 1976. Determinants of Corporate Borrowing. Working Paper. 875-76. Sloan School of Management-Massachusetts Institute of Technology.

Park, C. & Kim, H. 2009. The Affect of Managerial Overconfidence on Leverage, International Business and Economics Research Journal. 8(12): 115-126.

Rajan, R. G. & Zingales, L. 1995. What Do We Know About Capital Structure? Some Evidence From International Data, The Journal of Finance, 50(5): 1421-1460.

Roll, R. 1986. The Hubrys Hypothesis of Corporate Takeovers, The Journal of Business. 59(2): 197-216.

Ross, S. A., Westerfield, R., & Jordan, B. D. 2008. Corporate Finance Fundamentals. United State: Mc Graw-Hill/Irwin.

Valentin, C. 2015. Determinants of Corporate Financial Performance. Retrieved 9 September 2015 from http://www.dafi.ase.ro/revista/6/Costea%20Valentin.pdf

Weinstein, N. 1980. Unrealistic optimism about future life events, Journal of Personality and Social Psychology, 39: 806820.

Ye, B. & Wuhan. 2008. Managerial Overconfidence and Corporate Investment: Evidence from P. R. China, Journal of American Academy of Business. 13(1): 246-252.




DOI: https://doi.org/10.26905/jkdp.v20i3.257

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: -
Email: [email protected]

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0