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Dynamic capital structure in Indonesia: does the education and experience of CEOs matter?


Citation

Chua, Meishan and Ab Razak, Nazrul Hisyam and Md Nassir, Annuar and Yahya, Mohamed Hisham (2022) Dynamic capital structure in Indonesia: does the education and experience of CEOs matter? Asia Pacific Management Review, 27 (1). 58 - 68. ISSN 1029-3132

Abstract

Based on the Upper Echelon Theory, this paper examined the relationship of CEO education and experience with the dynamic capital structure (DCS) using the target leverage and speed of adjustment (SOA) models. This study applied the system generalised method of moments (SYS-GMM) to the target leverage model and Ordinary Least Squares bootstrapped standard errors to the speed of adjustment model. Using the 100 Indonesian firms, two notable findings were obtained. First, the target leverage model with the inclusion of CEO characteristics yielded a 22% of the SOA towards target leverage. Both variables showed a positive relationship with the target leverage. Second, the result revealed that the improvement of CEO education and experience by one standard deviation led to an increase in the SOA by 3.37% and 0.17%. Thus, the results were consistent with the theory whereby the education and experience of the CEOs were potential determinants the DCS.


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Additional Metadata

Item Type: Article
Divisions: School of Business and Economics
DOI Number: https://doi.org/10.1016/j.apmrv.2021.05.003
Publisher: Elsevier Taiwan LLC.
Keywords: Target capital structure; Speed of adjustment; CEO education; CEO experience and Indonesia
Depositing User: Ms. Nur Faseha Mohd Kadim
Date Deposited: 19 Jun 2023 03:57
Last Modified: 19 Jun 2023 03:57
Altmetrics: http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.1016/j.apmrv.2021.05.003
URI: http://psasir.upm.edu.my/id/eprint/101023
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