ANALYSIS OF THE INFLUENCE OF DEBT POLICY ON FINANCIAL PERFORMANCE OF COMPANIES DELISTED ON IDX PERIOD OF 2018-2020

Abstract

The purpose of the study was to examine the effect of debt policy onfinancial performance of listed firms in Indonesian Stock Exchange. Debt policymeasured by short term debt, long term debt,and total debt, while financialperformancemeasuredbyreturnonequity.Thisresearchusedtwocontrolvariables,namely, sizeand sales growth. This research was causal research with quantitativeapproach, while bythe level of it explanation, the research was associative research. The populationof the research included the company delisted in Indonesian Stock Exchange onmanufacturing sector during the 2018-2020 period. The purposive sampling wasused as sample collection technique for the research, and it was obtained 12companies. The method was used multiple regression analysis with two models.Model1wasregressionusingshorttermdebt,longtermdebt,andtotal debt, and model two was regression of independent variable. Short Term Debt had no effect on ROE. Long Term Debt had negativeandsignificanteffectonROE. Total Debt had negative andsignificant effect on ROE. The F test on model 1 was 6,833, and theF test model 2 was 5,022. Adjusted R² of model 1 was 0,052 which means thatvariation of Return On Equity could be explained by Short Term Debt and LongTerm Debt of 5,2%, while the remaining 94,8% was explained by other variablesoutside themodel. Adjusted R² of model 2 was 0,097 which means that variationofReturnOnEquitycouldbeexplainedbyTotalDebtof9,7%,whiletheremaining90,3%was explained byothervariables outsidethemodel.

Keywords: Financial performance, debt policy, short term debt, long term debt, total debt, return on equity

The purpose of the study was to examine the effect of debt policy onfinancial performance of listed firms in Indonesian Stock Exchange. Debt policymeasured by short term debt, long term debt,and total debt, while financialperformancemeasuredbyreturnonequity.Thisresearchusedtwocontrolvariables,namely, sizeand sales growth. This research was causal research with quantitativeapproach, while bythe level of it explanation, the research was associative research. The populationof the research included the company delisted in Indonesian Stock Exchange onmanufacturing sector during the 2018-2020 period. The purposive sampling wasused as sample collection technique for the research, and it was obtained 12companies. The method was used multiple regression analysis with two models.Model1wasregressionusingshorttermdebt,longtermdebt,andtotal debt, and model two was regression of independent variable. Short Term Debt had no effect on ROE. Long Term Debt had negativeandsignificanteffectonROE. Total Debt had negative andsignificant effect on ROE. The F test on model 1 was 6,833, and theF test model 2 was 5,022. Adjusted R² of model 1 was 0,052 which means thatvariation of Return On Equity could be explained by Short Term Debt and LongTerm Debt of 5,2%, while the remaining 94,8% was explained by other variablesoutside themodel. Adjusted R² of model 2 was 0,097 which means that variationofReturnOnEquitycouldbeexplainedbyTotalDebtof9,7%,whiletheremaining90,3%was explained byothervariables outsidethemodel.

Keywords: Financial performance, debt policy, short term debt, long term debt, total debt, return on equity