Pen Institutional Terhadap Kebijakan hutang dan kepemilikan Insider dalam konteks teori keagenan = The Effect of Institutional Ownership on Debt Policy and Insider Ownership: in Agency Theory Context

ABSTRACT The purpose of this research is to test the effect of institutional ownership to corporate debt policy and insider ownership in the context of agency theory. This research is based on the previous research by Bathala, et al. (1994), which found that institutional ownership influenced the debt ratio and insider ownership in order to minimeze the agency conflict. The research is focused on manufacture companies listed in Bursa Efek Jakarta for the period of 1990 to 1996. Data collection i s\u27 done by using pooling method and give 167 firm-year observations. This research uses the two stage least squares methode to test the hypothesis. The result of this research shows that institutional ownership has the negative and significant effect to the debt ratio and insider ownership. The result reflects that institutional ownership may replace debt and insider ownership in order to minimize the agency cost. Test of simultaneous debt ratio equation was conducted by using F test show that institutional ownership with the control variables of earning volatility, size growth, and insider ownership have coefficient of determination 0.51622. It means that, institutional ownership with those control variables can explain the variation in the debt ratio change by 51.62%. However, the test of insider ownership equation shows that institutional ownership with control variables of stock volatility, size, growth, and debt ratio simultaneously produce the coefficient of the determination 0.5699. It means that, institutional ownership with those control variables can explain the variation in insider ownership change by 56.99%. Based on the those results, it can be concluded that this research support the previous study by Bathala, et al. (1994), which found that institutional investors can be shown as the opportunistic andx effective monitoring agent that can minimize the agency cost. Keywords: Agency theory agency cost - institutional ownership debt policy simultaneous equation -- two-stage least squares