Similarity : INVESTMENT OPPORTUNITY SET, OWNERSHIP STRUCTURE AND FUNDING POLICY: AN AGENCY THEORY APPROACH

The objective of this study is to evaluate and analyze the influence of Invesment Opportunity
Set (IOS) towards funding policy of a company as well as the influence of two moderating
variables, public and foreign ownership, towards the relationship between IOS and funding
policy. The researchers involved control variables in order to describe the influence of IOS
and funding policy. The control variables were firm size, business risk and profitability. The
population was all companies listed in Indonesian Stock Exchange between 2008 and 2016.
The sampling method was purposive sampling. The data analysis methods were regression
model for panel data, Eviews and Factor Analysis. Based on the data analysis, IOS has
negative influence towards funding policy. As the result, companies with lower debt to equity
ratio in their funding structure tend to use their own capital (equity financing) to eliminate
agency issues. Government ownership strengthened the influence of IOS towards funding
place both before and after the control variables were involved. This showed that
government can influence policy-making in the company and government regulation can
either improve or become hindrance for performance. Foreign ownership also strengthened
the influence of IOS towards funding policy, both before and after the control variables were
involved. Therefore, companies can get higher amount of investment through foreign
ownership in terms of, for example, management system, technology and innovation, skills
and marketing. In addition, companies can hire well-experienced managers who can improve
their performance.