KEPUTUSAN PENDANAAN : PENDEKATAN TRADE-OFF THEORY DAN PECKING ORDER THEORY

Abstract

The purpose of this study is to analyze what Trade-off Theory and Pecking Order Theory able
to explain the financing decision in Indonesian Capital Market. In this study, determinant of
Trade-off theory are non-debt tax shields, size, and liquidity. The determinant of Pecking Order
theory are profitability, cash deficit, and investment. Sample in this study are 40 manufacturing
companies that active and liquid at Indonesian capital market over two years, from 2005 to
2006. Thus, this study have 80 observations. Sample used the method of purposive sampling.
Multiple regression model is used to test this hypothesis. The result of this Trade-off theory
approach is found that partially all proxy aren’t statistically significant. But simultaniously non
debt tax shields, size, and liquidity variable give statistically significant. While Pecking Order
theory approach is found that partially only cash deficit and investment variable statistically
significant. But simultaneously profitability, cash deficit, and investment variable have statistically
significant. So, firms that go public at Indonesian capital market tend to follow pecking
order theory than trade-off theory in their financing decision.
Keyword : trade-off theory and pecking order theory