Paper Title :The Impact of Debt Policy, and Company Size on Performance of Listed Company in the Indonesia Stock Exchange (IDX) with Agency Cost as a Mediating Variable

Author :Erni Masdupi

Article Citation :Erni Masdupi , (2017 ) " The Impact of Debt Policy, and Company Size on Performance of Listed Company in the Indonesia Stock Exchange (IDX) with Agency Cost as a Mediating Variable " , International Journal of Management and Applied Science (IJMAS) , pp. 89-93, Volume-3,Issue-6

Abstract : This study examines the impact of debt policy and company size on performance of listed companies in Indonesia Stock Exchange (IDX) between 2013 and 2015. This study also determine whether agency cost could mediate the relationships between debt policy and company performance as well as company size an company performance. The path analysis is utilized to answer the research questions. Based on 694 companyyear observations, it is found that, debt policy and company size did not affect agency cost. Company size was found to be a significant in influencing company performance. Company size could increase company performance through economic of scale. Perhaps, in an emerging market such as Indonesia, size plays a significant role in influencing company performance due to the presence of greater economies of scales, better competitive position, having more skilled managers, and having greater access to cheaper sources of funds. It means that listed companies on the IDX could increase performance by increasing their size. This implies that the regulators should adopt policies that encourage or at least do not impede companies to grow in size. Finally, agency cost had a significant and negative effect on performance of listed companies on the IDX. Agency cost could mediate the relationships between debt policy (company size) and company performance, but this could not be proven in the listed companies on IDX. Keywords- Debt policy, company size, agency cost, company performance, mediating variable

Type : Research paper

Published : Volume-3,Issue-6

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