IDEAS home Printed from https://ideas.repec.org/h/eme/isetez/s1571-038620240000034011.html
   My bibliography  Save this book chapter

Does the Covid-19 Pandemic Affect the Capital Structure of Steel Companies in Indonesia?

In: The Finance-Innovation Nexus: Implications for Socio-Economic Development

Author

Listed:
  • Ayudya Puti Ramadhanty
  • Taufik Faturohman

Abstract

The COVID-19 pandemic hit the demand for steel products and their derivatives by 40–50%. As a result, productivity and factory operations will inevitably suffer. Therefore, when fulfilling funding demands that will arise if the company has an appropriate capital structure, the corporation must choose between rising debt (on the liability side) or issuing shares for external funding as viable financial alternatives. This empirical study examines the effects of the COVID-19 pandemic on capital structure before and during the pandemic. This study implemented a descriptive quantitative approach, measured using a method based on panel regression and system Generalised Method of Moments (GMM) using the secondary data quarterly from 2018 to 2021 with the samples of eight steel companies listed on the IDX. The study findings show that COVID-19 influences the capital structure; firm-specific variables like COVID-19 profitability positively affect the capital structure, whereas liquidity, earning volatility, and non-debt tax shield negatively affect the capital structure. Meanwhile, the result of system GMM shows that only COVID-19 and liquidity significantly affect the debt ratio.

Suggested Citation

  • Ayudya Puti Ramadhanty & Taufik Faturohman, 2024. "Does the Covid-19 Pandemic Affect the Capital Structure of Steel Companies in Indonesia?," International Symposia in Economic Theory and Econometrics, in: The Finance-Innovation Nexus: Implications for Socio-Economic Development, volume 34, pages 133-145, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-038620240000034011
    DOI: 10.1108/S1571-038620240000034011
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620240000034011/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620240000034011/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1108/S1571-038620240000034011
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620240000034011/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/S1571-038620240000034011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Capital structure; COVID-19; steel industry; debt ratio; trade-off theory; pecking order theory; O11; Q01; Q5;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:isetez:s1571-038620240000034011. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.