Dependency on corporate investment management in the context of financial distress and constraint

Nuur Shofa Salsabila, Basuki

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This study aims to determine the effect of financial distress and financial constraints on corporate investment decisions in the manufacturing sector. The study was conducted using a quantitative descriptive approach. The sample of this research are manufacturing companies listed on the Indonesia Stock Exchange in the period 2012-2016. This research use purposive sampling selection techniques, where 91 companies were sampled from a total of 721 observations. The secondary data type is obtained from company’s financial statements. Hypothesis testing is carried out using multiple linear regression test using SPSS 20 tools. The test results indicate a positive significant effect of each financial distress and financial constraint on corporate investment decisions. The control variables used in this study are leverage that does not show a significant influence on corporate investment decisions, and company size which shows a significant positive effect on corporate investment decisions. Implications from study allow investors to make better investment decisions which lead to greater market efficiency. Thus, current study contributes towards the investment management literature given the importance of interpreting information from the investors point of view.

Original languageEnglish
Pages (from-to)487-501
Number of pages15
JournalPolish Journal of Management Studies
Volume22
Issue number2
DOIs
Publication statusPublished - 2020

Keywords

  • Financial constraints
  • Financial distress
  • Investment decisions

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