The relationship between behavioural characteristics (both rational and irrational measures) and capital structure determinants has been empirically validated. This study examines the influence of the behavioural traits of overconfidence and optimism on capital structure determinations by IDX-listed public Indonesian firms’ (Tbks) management. This is statistically tested via a comprehensive hypothesis modelling construct that includes empirically validated capital structure determinants (market timing, profitability, tangibility, size and their impacts on stock price). Panel regression PLS and path analysis were performed on stock price data and financial metrics extracted from the 2013–2020 financial statements of 55 Tbks from the LQ-45 and Kompas-100 stock indices. This study found that Optimism, Market Timing and Adjusted Debt on Market Timing are not determinants of capital structure for Tbks, while Overconfidence and the control variables Firm Profitability, Firm’s Asset Tangibility and Firm Size were statistically validated as capital structure determinants. Overconfidence (as a behavioural bias) is observed to have significant negative influence on management’s capital structure determinations, while Optimism has insignificant positive influence. The less aggressive leveraged models adopted by the sampled Tbks may indicate that implemented good principles of corporate governance have played a role in preventing capital structure determinations skewed by managements’ behavioural biases or psychological tendencies.

This study focuses specifically on the effect of Entrepreneurial Values and Entrepreneurial Orientation on Financial Performance of Indonesian state-owned enterprise and also incorporates Environmental Dynamism (ED) and Resource Availability (RA) as moderating variables which will influence the effect of (i) Entrepreneurial Orientation (EO) on Financial Performance (FP), (ii) Entrepreneurial Values (EV) on Financial Performance (FP), and (iii) Entrepreneurial Values (EV) on Entrepreneurial Orientation (EO). In addition, this study also provides a better understanding about the effect of Financial Performance on Intention to Sustainable Development (ITS) as well as Financial Performance on Intention to Collaboration (ITC) in Indonesian state-owned enterprises. The method of analysis used in this study is PLS-SEM methodology with purposive sampling method. The unit of analysis is all the state-owned enterprises listed which consists of 81 out of 106 state-owned enterprises, while the unit of observation is individuals from those state-owned enterprises (represented by the paired CEO and CFO who are originated from the same company). The findings of this study are that there is a significantly positive effect of: (i) EV on EO; (ii) EO on FP; (iii) FP on ITS; and (iv) FP on ITC. Meanwhile, (i) there is not any significantly positive effect of EV on FP, and (ii) there is no significant moderating effect of ED and RA on the relationship between (1) EV and FP, (2) EO and FP, as well as (3) EV and EO.

This study examines whether capital structure determinations by Indonesian publicly listed firms (Tbks) are influenced by the behavioural biases of overconfidence and optimism, with the underlying rationality frameworks being framed by relevant financial information and impacted by decision-makers’ demographic attributes. Data were obtained from survey respondents and statistically analysed using partial least squares structural equation modelling to identify the indicators of causative dynamics within the hypothesised relationships. Sampled Tbks’ management (CEOs/CFOs) displayed the inherent behavioural traits of overconfidence and optimism in their capital structure determinations. However, such behavioural variables were not statistically proven to significantly influence capital structure decision-making and, hence, were not validated as capital structure determinants. The pecking order framework was revealed to have a significant framing effect on capital structure decision-making by sampled managers. Sampled managers’ demographic attributes and backgrounds were found to be capital structure determinants but did not have a mediating or moderating influence on the modelled relationship between behavioural variables and capital structure.