THE OVER-INVESTMENT OF FREE CASH FLOW, CASH HOLDING, OWNERSHIP STRUCTURE: AN IMPACT OF COVID 19

Abstrak

Abstract: This study aims to investigate the impact of Free Cash Flow (FCF), Cash holding and Ownership Structure on Overinvestment before and during Covid 19 . This study used panel data consisting of 147 listing service companies for the period 2016-2020. The panel data estimation model used is the Fixed Effect Model. The results of the study for the whole model show that FCF and Cash Holding have a negative and significant effect on overinvestment. Meanwhile, government ownership seems to have positive and significant effect on overinvestment, but then foreign ownership also has positive but insignificant. Furthermore, the results by taking into account the time period before and during Covid 19 showed that Free Cash Flow has positive and significant impact before Covid 19 and had a positive and insignificant effect during the Covid 19 period. Cash holding has negative and significant effect before Covid 19 but insignificant effect during Covid 19. Government ownership has positive and significant effect during Covid 19 but insignificant before Covid-19 The same results were also found for foreign ownership seems to have a positive and significant effect before Covid 19 and negative insignificant effect during Covid 19. In sum, it appears that government ownership is more dominant in influencing overinvestment in Indonesia.

Keywords: Free Cash Flow, Cash Holding, Ownership Structure, Over-investment

Abstrak: Penelitian ini bertujuan untuk menganalisis dampak free cash flow(FCF), cash holding dan ownership structure terhadap Overinvestment sebelum dan semasa Covid 19 . Penelitian ini menggunakan data panel yang terdiri dari 147 perusahaan jasa yang terdaftar di Bursa Efek Indonesia untuk periode waktu 2017-2021. Model estimasi data panel menggunakan Fixed Effect Model. Hasil penelitian secara keseluruhan menunjukkan bahwa free cash flow dan cash holding berpengaruh negatif dan signifikan terhadap overinvestment. Sementara government ownership berpengaruh positif dan signifikan terhadap overinvestment, sama halnya dengan foreign ownership juga positif namun tidak signifikan. Selanjutnya, hasil penelitian dengan mempertimbangkan periode waktu sebelum dan semasa Covid 19 menunjukkan hasil yang berbeda dimana Free Cash Flow memiliki dampak positif dan signifikan sebelum Covid 19 dan berpengaruh positif dan tidak signifikan pada periode semasa Covid 19 . Cash Holding berpengaruh negatif dan signifikan sebelum Covid 19 dan berpengaruh negatif namun tidak signifikan semasa Covid 19. Kepemilikan pemerintah berpengaruh positif dan signifikan semasa Covid 19 dan tidak signifikan sebelum Covid 19 . Hasil yang sama juga didapati Foreign ownership berpengaruh positif dan signifikan sebelum Covid 19 dan berpengaruh negatif dan tidak signifikan semasa Covid 19 . Secara lebih detail, terlihat bahwa kepemilikan pemerintah lebih dominan dalam mempengaruhi overinvestment di Indonesia.

Kata Kunci: Aliran Kas Bebas, Cash Holding, Struktur kepemilikan, Over-investment