Analysis of Factors Affecting Bond Rating of Non-Financial Corporate Traded on Indonesia Stock Exchange in 2018

Authors : Muhammad Rifky Vidiarta; Bambang Santoso Marsoem

Volume/Issue : Volume 6 - 2021, Issue 1 - January

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This study analyzes the influence of the variables of Company Growth, Profitability, Leverage, Bond Age and Auditor's Reputation on the rankings of non-financial corporate bonds traded on the Indonesia Stock Exchange for the period 2018. The sample selection technique was carried out by purposive sampling consisting of 147 of 717 corporate bonds that published by 29 out of 161 companies from all sectors. The research analysis method used is descriptive statistics and Ordinal Logit Regression. The results showed that partially the company growth variable had no effect on bond rating, profitability and auditor reputation had a positive effect on bond rating, while leverage and bond age had a negative effect on bond rating. The implication of this research is that companies need to reduce their debt ratios and issue bonds with a short life in order to increase their bond rating so that investors are interested in the bonds. In addition, companies with high profitability ratios and using Big Four external auditors find it easier to get external sources of funds through bonds. This is because both of them have a positive effect on the Bond Rating. For further research, it is expected to study other variables that affect the bond rating because the coefficient of determination in this study is 18.9%, while the remaining 81.1% is influenced by other variables not explained in this study.

Keywords : Company Growth, Profitability, Leverage, Maturity, Auditor Reputation and Bond Rating.


Paper Submission Last Date
31 - October - 2021

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