Political Patronage on Capital Structure in Indonesia

Abstract

Objective – The purpose of this research is to test the theory of capital structure by determining whether the relationship is affected by Political Patronage. The study will examine political support, capital structure and financial performance of the company. Methodology/Technique – The data in this research is in the form of financial ratios displayed in the financial report of each company listed from 2010 to 2016. The sample was selected using purposive sampling with as many as 70 companies indicated to have political support. The data was analysed using regression analysis. Findings – The results show that Political Patronage has an influence on capital structure and political Patronage has a weak effect on financial performance. Type of Paper: Empirical Keywords: Political Patronage; Capital Structure; Financial Performance. Reference to this paper should be made as follows: Istan, M; Kamaludin. 2019. Political Patronage on Capital Structure in Indonesia, J. Fin. Bank. Review 4 (3): 89 – 97 https://doi.org/10.35609/jfbr.2019.4.3(2) JEL Classification: G30, G32, G39.