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Hubungan antara Growth Opportunity dengan Debt Maturity dan Kebijakan Leverage serta Fungsi Covenant dalam Mengontrol Konflik Keagenan antara Shareholders dengan Debtholders
Rhini Fatmasari. M.Sc
ABSTRACT
Agency conflict is a phenomenon that occurs when a firm is doing its financing policies, especially of those related to the leverage strategies. Some of the former researches revealed some empirical evidence of the existence of a negative effect between growth opportunity, leverage, and debt maturity as one of the efforts in controlling the agency conflict between stockholders and bondholders.
By using panel data regression model and data observation for over six years, this research found that firms with high growth opportunity tend to use low leverage policies with short maturity to control the agency conflict between stockholders and bondholders. On the other hand, firms with low growth opportunity tend to use higher leverage policies with a longer period of debt maturity. Moreover, covenant as a moderating variable, could lower the negative relation between growth opportunity and leverage, but it could not diminish the negative relation between growth opportunity and debt maturity. Debt maturity and covenant also could not be use as substitution variable to lessen the agency conflict.
Keywords: growth opportunity, leverage, debt maturity, covenant, stockholders and bondholders conflicts.
The modern corporation will still exist and dominate the economic life if it has two combinations of assets in place (tangible assets) and investment opportunities (intangible assets). Both of these combinations can affect the capital structure and corporate value. In addition, these instruments will also create and exploit investment opportunities (Arifin: 209). If the investment opportunity is not executed, then the economic activity is limited to sale and purchase of materials, capital and labor. Though this activity is already saturated, full of competition, and produced only a minimal profit. While the main driver of modern economy is the exploitation of new technologies and the transfer process becomes more capital intensive production. Utilization and execution of investment opportunities can only be done if companies have the financial resources, technical and human resources are adequate.
With regard to funding issues, companies can obtain from two sources, first from the company itself, such as the issuance of stock, and retained earnings; both from outside the company, a debt to a third party which is largely determined by the policy of funding by one company. For whatever a company’s policy seems to be funding from outside the company’s debt will be a strategic choice. However, this policy does not mean no risk. There are conditions that can arise from the policy of the emergence of what he called the agency conflict. In the perspective of agency theory the conflict between the agent and the principal against the backdrop of asismetri information. Agents who have information that more opportunistic actions that benefit themselves. …
