ABSTRACT
This paper examines the determinant factor of corporate cash holding level and also focuses on the influence of state ownership and soft budget constraint on the cash holding of Indonesia State Owned Enterprises (SOE) from 2015 to 2019. This study’s sample was non-financial firms of SOE and selected with the purposive sampling method. This study applied panel regression by combining data as cross-section and time series. The results show that net working capital, leverage, firm size, and capital expenditure significantly affect Indonesia’s SOE cash holding. This paper also examines and quantifies the cash holding level of state ownership on SOE that dramatically decreases in line significantly with the percentage of state ownership. This relation can be attributable to the soft-budget constraints (SBC) inherent in state ownership. As majority shareholders, all SOE assist the government as development agents through various programs run by the government, a condition very conducive for the SBC effect. However, the study shows that the interaction between state ownership and bank loans are non-significantly correlated on cash holding level. Therefore, it shows that SOE were able to maintain their cash level without government intervention.
