Capital Structure and Market Power Interaction: Evidence from Food and Beverage Companies Listed in Jakarta Stock Exchange (JSX)

Abstract

Pervitasari, Andriani. Capital Structure and Market Power Interaction: Evidence from Food and Beverage Companies Listed in Jakarta Stock Exchange (JSX). 2004. International Program Fakultas Ekonomi Universitas Islam Indonesia. Yogyakarta. This thesis explained the phenomena about the relationship between capital structure and market power in Food and Beverage companies listed in Jakarta Stock Exchange (JSX). The writer used Tobin 's Q as a measurement for indicating the market power. The writer predicted that the relation between capital structure and market power is cubicle. When q is small, firms use excessive debt. Meanwhile, in the case of the condition that the q begin to rise, firms reducing their debts. Firms will use excessive debt policy again when the qis big enough. This unique relation is caused by the complex interaction between market condition, agency problem and bankruptcy cost. However, is this prediction proved in Food and Beverage companies? After all, the result of the analysis carried out in this research did not really in line with the prediction previously made.