Debt and Entrenchment: Evidence from Thailand and Indonesia

28 Pages Posted: 16 Jul 2004

See all articles by Pramuan Bunkanwanicha

Pramuan Bunkanwanicha

ESCP Business School

Jyoti P. Gupta

European School of Management (ESCP-EAP)

Rofikoh Rokhim

Management Reseach Center, Department of Management, Faculty of Economics, Universitas Indonesia; Universitas Indonesia, Graduate School of Management

Date Written: September 15, 2003

Abstract

This paper examines the relation between debt and corporate governance in emerging market economies. We use firm-level panel data of listed companies from Thailand and Indonesia to analyze the firm's corporate financing behaviors in connection with its corporate governance arrangements. Our results show that the debt structure is linked to the corporate governance. We find that weaker corporate governance firms, in particular measured by the entrenchment effects, tend to have a higher debt level. The evidence is relatively stronger during the crisis period. Our results also shed light on the importance of the country-specific institutional settings that would affect the empirical results.

Keywords: Debt, Entrenchment, Corporate Governance, Financial Crisis, Easi Asia

JEL Classification: G15, G32, G34

Suggested Citation

Bunkanwanicha, Pramuan and Gupta, Jyoti and Rokhim, Rofikoh, Debt and Entrenchment: Evidence from Thailand and Indonesia (September 15, 2003). Available at SSRN: https://ssrn.com/abstract=478302 or http://dx.doi.org/10.2139/ssrn.478302

Pramuan Bunkanwanicha (Contact Author)

ESCP Business School ( email )

79 Avenue de la Republique
Paris, 75011
France

Jyoti Gupta

European School of Management (ESCP-EAP) ( email )

79 avenue de Republique
Groupe ESCP-EAP
75543 Paris Cedex 11
France
+33 1 49 23 22 94 (Phone)
+33 1 49 23 20 80 (Fax)

Rofikoh Rokhim

Management Reseach Center, Department of Management, Faculty of Economics, Universitas Indonesia ( email )

Department of Management Building 2nd Floor
Universitas Indonesia, Depok Campus
West Java 16424
Indonesia
+62-21-7272425 (Phone)
+62-21-7863556 (Fax)

Universitas Indonesia, Graduate School of Management ( email )

Depok, West Java 16424
Indonesia