Effect of Debt-to-Asset Ratio, Maturity, Guarantees, and Company Size on Bond Ratings in Construction Companies

Abstract

The purpose of this study was to determine and analyze effect of the debt-to-assets ratio, maturity,guarantee, and company size on construction company bond ratings. The population and sample of thisresearch is construction companies that publish complete financial reports from 2014 to 2022. Dataanalysis uses logistic regression analysis. The results showed that: 1) Debt to assets ratio has nosignificant effect on the probability of bond ratings, because investors tend to buy bonds because they seethe company's reputation not from the Debt to Assets Ratio obtained by the company; 2) Maturity has nosignificant effect on bond ratings, because investors tend to buy bonds with ages under 3 years, becausecompanies with maturity under 3 years are able to pay off their obligations to pay the loan principal atmaturity; 3) Guarantees have no significant effect on bond ratings, because investors tend to buy bondsbecause they look at the company's reputation, not from what is guaranteed and not guaranteed to thecompany; 4) Company size has no significant effect on bond ratings, because investors tend to buy bondsnot in terms of company size but from the company's reputation; 5) The debt-to assets ratio, maturity,guarantee, and company size affect bond ratings.