Abstract
This research is motivated to study the phenomenon of the financial health of state-owned enterprises (SOEs) who are healthy but still dependent on government subsidies. Based on these phenomena, the aim of this study is to determine the factors that affect the company’s financial health. In order to achieve this aim, the present research will employ the purposive sampling method of seven SOEs with observations during the last 11 years. The data analysis employed involves the use of linear regression model and its management through software SPSS-Amos 23. As a result, the study found that subsidy is significant and negatively affects financial health, which means that the financial health of the SOEs is getting down when funding is still maintaining subsidy every year. Instead, financial health would be enhanced if the government limits the subsidies gradually and gives broad authority to decide on the pricing structure and control of resources to support the cost of efficiency. The study also found that firm size strengthens the link between subsidies to financial health with a positive coefficient and is exhibited significantly, which means that the larger the firm size, the stronger the effect of subsidies on the financial health SOEs. This means that the SOEs that have a good asset capability tend to have a better financial health, especially because efficient opportunities are supported by the control of resources and a more economical business scale.
Highlights
This research is motivated to learn from the analysis of the phenomenon of state-owned enterprises (SOEs) that are still obtaining funding assistance from the government in the form of subsidies or additional capital
The results of the statistical calculation as expressed of the correlation matrix F-statistic, t-statistic, adjusted R2 and the regression coefficients showed that it had found some important things to be stated in general and in the following way. It shows that the independent variables are strongly correlated to financial health, which is a variable subsidy with a correlation coefficient of −0.829** and firm size with a correlation coefficient of −0.792, while having earnings management on the middle level with a correlation coefficient of 0.469* which means that it needs the third variable to be considered as the main variable that can affect the financial health of SOEs
Any amount of profitability reported no financial impact on health. (b) The practice of accrual-based earnings management showed no significant positive effect on financial health or does not support the hypothesis of this study. (c) Subsidy significantly and negatively has effect on the financial health or supporting the hypothesis proposed in this study
Summary
This research is motivated to learn from the analysis of the phenomenon of state-owned enterprises (SOEs) that are still obtaining funding assistance from the government in the form of subsidies or additional capital. It should be that, firm with such a large-scale SOEs can operate efficiently and is able to obtain greater market share, so as to meet the funding needs independently. The firm can apply rate or price at a reasonable level for return on investment, and even capable of doing the business development on a larger scale efficiently. The practices such as performance management and strategic planning have conquered the public sector in many countries (Goeminne and George 2018). The current study examines some of the major factors that affect the financial health of SOEs and provide information about the role of these factors so that it can become a reference in the decision to improve the financial health of the company
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