ABSTRACT
This research investigates the effect of state ownership on financial constraints, and the effect of financial constraints on firm performance. This study uses data of non-financial companies listed on the Indonesia Stock Exchange with the period 2013 - 2016, using purposive sampling method. In this research, we use two models, with two dependent variables, the first is financial constraint, and the second is firm performance. Both models are also controlled with variable age and firm size. Measurement of financial constraint in this research using KZ Index model proposed by Kaplan and Zingales (1997). Firm performance is measured using the amount of return on assets. The results show that state ownership negatively affect financial constraint and there is a negative effect between financial constraint on firm performance.
