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Corporate Responses to Currency Depreciations: Evidence from Indonesia

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  • Agustinus, Prasetyantoko

Abstract

This paper examines the impact of macro fluctuation on firm’s balance sheet to understand firm’s net worth as well as the corporate distress probability. We argue that debt policies could be pro-cyclical, since it enhances corporate distress risk when currency depreciation comes.

Suggested Citation

  • Agustinus, Prasetyantoko, 2007. "Corporate Responses to Currency Depreciations: Evidence from Indonesia," MPRA Paper 6502, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6502
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    File URL: https://mpra.ub.uni-muenchen.de/6502/1/MPRA_paper_6502.pdf
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    References listed on IDEAS

    as
    1. Claessens, Stijn & Djankov, Simeon & Nenova, Tatiana, 2000. "Corporate risk around the world," Policy Research Working Paper Series 2271, The World Bank.
    2. Rudi Dornbusch, 2002. "A Primer on Emerging-Market Crises," NBER Chapters, in: Preventing Currency Crises in Emerging Markets, pages 743-754, National Bureau of Economic Research, Inc.
    3. Kristin J Forbes, 2002. "How Do Large Depreciations Affect Firm Performance?," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 214-238.
    4. George Allayannis & Gregory W. Brown & Leora F. Klapper, 2003. "Capital Structure and Financial Risk: Evidence from Foreign Debt Use in East Asia," Journal of Finance, American Finance Association, vol. 58(6), pages 2667-2710, December.
    5. Pomerleano, Michael, 1998. "The East Asia crisis and corporate finances : the untold micro story," Policy Research Working Paper Series 1990, The World Bank.
    6. Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fixing for Your Life," NBER Working Papers 8006, National Bureau of Economic Research, Inc.
    7. Mihir A. Desai & C. Fritz Foley & Kristin J. Forbes, 2004. "Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Crises," NBER Working Papers 10545, National Bureau of Economic Research, Inc.
    8. Mr. Manuel De la Rocha & Mr. Roberto Perrelli & Mr. Christian B. Mulder, 2002. "The Role of Corporate, Legal and Macroeconomic Balance Sheet Indicators in Crisis Detection and Prevention," IMF Working Papers 2002/059, International Monetary Fund.
    9. Claessens, Stijn & Djankov, Simeon & Klapper, Leora, 1999. "Resolution of corporate distress - evidence from East Asia's financial crisis," Policy Research Working Paper Series 2133, The World Bank.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    currency depreciation; firm performance; debt ratio;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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