A research team from the Faculty of Economics and Business at Semarang State University (FEB UNNES) has successfully identified ways to strengthen the resilience of the Indonesian capital market. The research, led by Kris Brantas Abiprayu, M.Sc., and Erisa Aprilia Wicaksari, M.M., along with three of their students, found a close relationship between a company’s debt structure and institutional investor ownership, which influences stock price stability. This finding is not only academically valuable but can also serve as a practical guideline for creating a stronger and more shock-resistant financial system.
The study, titled “Debt Maturity Structure and Stock Price Crash Risk: The Role of Institutional Ownership,” analyzed in-depth data from non-financial companies listed on the Indonesia Stock Exchange over five years (2019-2023). Using a rigorous quantitative approach, the study revealed that reliance on long-term debt can be a double-edged sword. On the one hand, this type of debt is necessary for expansion. Still, on the other hand, research shows that excessively high debt levels actually increase the risk of stock price declines, primarily due to weakened creditor oversight mechanisms.
However, amidst these risky findings, the UNNES FEB research team also discovered an effective counterbalance. The presence of capable institutional investors, such as pension funds, insurance companies, and mutual funds, has been shown to act as a market stabilizer. Significant share ownership by these institutions encourages better corporate governance practices, increases transparency, and enforces management accountability, significantly reducing the risk of extreme price volatility. The implications are clear: for company managers, these findings emphasize the importance of prudent debt composition; for investors, it is a key factor in portfolio analysis; and for regulators, such as the Financial Services Authority (OJK), this research offers an empirical basis for refining market oversight frameworks.
More than just market analysis, this research provides a tangible and measurable intellectual contribution to the global sustainable development agenda. Directly, this research lays the foundation for achieving all three Sustainable Development Goals (SDGs). First, by strengthening financial system stability, this research supports SDG 8: Decent Work and Economic Growth, as healthy capital markets are a prerequisite for attracting productive investment that creates jobs. Second, through developing new knowledge in corporate finance and financing, this research contributes to SDG 9: Industry, Innovation, and Infrastructure, by promoting the financing efficiency and policy innovation needed by industry. Third, and most fundamentally, the emphasis on transparency and accountability aligns this research with SDG 16: Peace, Justice, and Strong Institutions, by strengthening the foundations of reliable and integrated economic institutions.
