Abstract
The research aims to examine the difference between absence and presence life cycle stage in technology information digitalization (TID) as a form of open innovation in reducing information asymmetry. Furthermore, companies with asymmetric information prefer debt over equity. The study collects 3.343 pooled data observation units of companies listed in the Indonesian capital market period 2008 to 2019. We use OLS regression analysis to determine the difference between the absence and presence lifecycle stage in determining capital structure relations and exploiting growth opportunities. The study found information disclosure obligation of the capital market regulator has not been fully disclosed through TID. As a result, companies choose to pass in growth opportunities with debt or equity in the absence life cycle stage. Presence lifecycle stage, in the introduction stage, the company misses growth opportunities. Growth and mature stage, debt has a positive effect on the utilization of growth opportunities. The company prefers the issuance of debt with lower information sensitivity than equity. Presence culture, such as majority ownership, generates incentives for open innovation from capital market regulators, which still contain information asymmetry.
Highlights
Growth Mature Operating − + Invest Financing Shake out Void in theory Decline + or
Managers have a strategic role in open innovation using technology information digitalization (TID) for information disclosure
When firm-specific information is added as a disclosure of information, there is still information asymmetry, to the issuance of equity, which is more sensitive to market responses, they issue debt
Summary
Older companies generally have better information credibility, more assets, and a better reputation than younger companies that use more leverage. In the maturity stage, a company can substitute debt with internal financing [14] or prefer debt to equity [42] as a form of low information asymmetry. If there is a large asymmetry problem at the introduction stage, the company uses internal funds to reduce leverage. Companies have less information asymmetry and greater collateral asset ownership during the growth and maturity stages, prioritizing external funding through debt instead of equity [17]. As a result, starting from maturity, the financing for open innovation is reduced, and if needed, they prefer equity because there is less asymmetric information. As a result, starting from maturity, the financing for open innovation5is reduced, and if needed, they prefer equity because there is less asymmetric information
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