Liquidity Management, Corporate Investment, and Presidential Election

Taufiq Arifin, Payamta Payamta, Normaziah Mohd Nor


This study analyzes whether election as a political event affect the liquidity management and investment decisions of Indonesian listed firms. Using presidential election as an uncertainty shock over 2010-2016 time period, we find that firms are more likely to increase their liquid assets and delay investment one year prior the election year. The precautional measure of holding more cash is that firms allocate more cash prior the election year to maintain financial flexibility because rising funds rendered transaction costs. However, we further find that firms reduce their liquidity and increase their investment during the election year. These results suggest that elections create political uncertainty and induce higher risk of extraction. Since cash, as well as other liquid assets, are the easiest resource to be grabbed by the politicians, firms have more incentives to hold less cash and therefore structure their liquid assets into hard assets to prevent such a risk.

Penelitian ini bertujuan untuk menganalisis pemilihan presiden sebagai salah satu event politik yang akan mempengaruhi manajemen likuiditas dan keputusan investasi perusahaan publik di Indonesia. Dengan menggunakan event pemilihan presiden sebagai uncertainty shock dengan periode sampel 2010-2016, kita menemukan bahwa perusahaan akan cenderung meningkatkan likuiditasnya dan menunda keputusan investasi setahun sebelum pemilihan presiden. Keputusan meningkatkan kas ini adalah bentuk strategi perusahaan untuk menjaga likuiditasnya dikarenakan adanya ketidakpastian di masa yang akan datang terkait dengan hasil dari pemilihan presiden. External financing di masa ketidakpastian akan menimbulkan kos transaksi yang lebih tinggi. Tetapi, bukti selanjutnya menunjukkan bahwa perusahaan akan mengurangi likuiditasnya dan meningkatkan investasi di tahun pemilihan presiden. Bukti empiris ini menunjukkan bahwa pemilihan presiden akan meningkatkan risiko political extraction. Dikarenakan kas, dan juga aset likuid lainnya, adalah bentuk sumberdaya yang mudah untuk dimanfaatkan oleh politisi, perusahaan akan memiliki motif yang lebih kuat untuk mengurangi aset likuidnya dan menggunakannya untuk investasi di aset fisik untuk menghindari risiko political extraction.    



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