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Jurnal Ekonomi Malaysia

54 (3) 2020 101 – 115

The Role of Business Sophistication, Revenue Diversification, and Labor Relations on Firm Financing Choice
Peranan Kecanggihan Perniagaan, Kepelbagaian Hasil, dan Hubungan Buruh terhadap Pilihan Pembiayaan Firma

Accounting Department
BINUS Graduate Program-Master Accounting
Bina Nusantara University
Jakarta, 11480
INDONESIA

moch.areifianto@binus.edu

Faculty of Economics and Business
Universitas Sebelas Maret
Jalan Ir. Sutami 36 A
Surakarta, Central Java
INDONESIA

irwan_t@staff.uns.ac.id

Department of Economics
Faculty of Economics and Business
Brawijaya University and Institute for Development of
Economics and Finance (INDEF)
Jl. MT Haryono No. 165, Malang, 65145
INDONESIA

erani@indef.or.id

Faculty of Business
Sampoerna University
L’Avenue Office, Jl. Raya Pasar Minggu Kav.16A
Pancoran, Jakarta 12780
INDONESIA

wahyoe.soedarmono@sampoernauniversity.ac.id

Abstract

We model and empirically estimate the relationship of ordinal scaled dependent variable: firm financing choice with business sophistication, revenue diversification and labor relationship using Indonesian data. We use controlling variables derived from Trade off Theory and Pecking Order Theory literature. We then elaborate the baseline model to include additional categoric variables of location and ownership, besides the interaction terms. The dataset is constructed from World Bank Enterprise Survey Year 2015 and Generalized logistic —partial proportional odds regression is employed as an estimator. We find that better business sophistication leads to greater acceptance to financing from outsiders and more diversified firms tend to prefer external financing. Finally, a better labor relationship corresponds to a greater preference for internal financing.

Keywords

business sophistication; Financing choice; labor relationship; revenue diversification
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Ariefianto, , Trinugroho, , Yustika, , & Soedarmono, (2020). The Role of Business Sophistication, Revenue Diversification, and Labor Relations on Firm Financing Choice. Jurnal Ekonomi Malaysia, 54(3), 101–115.

@article{ariefianto2020role,
  title={The Role of Business Sophistication, Revenue Diversification, and Labor Relations on Firm Financing Choice},
  author={Ariefianto, Moch. Doddy and Trinugroho, Irwan and Yustika, Ahmad Erani and Soedarmono, Wahyoe},
  journal={Jurnal Ekonomi Malaysia},
  volume={54},
  number={3},
  pages={101—115},
 

year={2020},
}

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