Government Ownership, Financial Constraint, and Firm Performance
Chorry Sulistyowati (a*), Aisyatur Ridlo (b)

a) Faculty of Economics and Business, Airlangga University Jalan Airlangga 4-6, Surabaya 60286, Indonesia
*chorry_040318214[at]gmail.com
b) Faculty of Economics and Business, Airlangga University Jalan Airlangga 4-6, Surabaya 60286, Indonesia

Abstract

This research investigates the effect of government ownership on financial constraints and firm performance, and the influence of financial constraints on firm performance. This study uses data of non-financial companies listed on the Indonesia Stock Exchange with the period 2013-2016 using purposive sampling. In this research, we use two models, with two dependend variables, the first is financial constraint, and the second is firm performance. Both models are also controlled with variable age and firm size. Measurement of financial constraint in this research using KZ Index model proposed by Kaplan and Zingales (1997).
Firm performance is measured using the amount of return on assets. The results show that government ownership negatively affects financial constraint and firm performance and there is a negative influence between financial constraint on firm performance​.

Keywords: Financial constraint; Firm performance; Government ownership: KZ Index

Topic: Strategic Management, Entrepreneurship and Contemporary Issues