Governance through Debt: Blockholder Structure, Market Timing, and Leverage Recapitalization Decisions
DOI:
https://doi.org/10.47747/icbem.v3i1.3234Abstract
This study examines how blockholder ownership structures and market timing influence corporate leverage recapitalization decisions in Indonesian non-financial firms. Utilizing a sample from 2014–2023, the research employs logistic regression to analyze recapitalization events exceeding a 5% materiality threshold. Findings reveal that concentrated blockholder ownership significantly shapes recapitalization, employing leverage as a strategic governance mechanism to align management interests and mitigate agency costs. Furthermore, firms demonstrate a pronounced sensitivity to market timing, strategically executing recapitalizations to exploit favorable equity valuations. The high ownership concentration characteristic of the Indonesian market underscores debt's role as a pivotal tool for blockholder monitoring and risk management, thereby defining corporate financial policy in this emerging economy.
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