The Effect of Digitalization and Ownership Structure on The Financial Constraints of Indonesian Non-Financial Companies

Abstract

Aims: This study aims to examine the influence of digitalization, managerial ownership, and family ownership on the financial constraints of non-financial companies in Indonesia, while contributing to the literature on digital transformation and corporate governance in emerging markets. Study Design: This study adopts a quantitative research design using panel data regression analysis. Place and Duration of Study: This study uses secondary data from non-financial companies listed on the Indonesia Stock Exchange (IDX) during the period 2020–2024. Methodology: A total of 41 companies were selected as research samples using purposive sampling, resulting in 205 firm-year observations. The analysis was conducted using panel data regression with the Fixed Effects Model (FEM), selected based on model suitability tests. Digitalization, managerial ownership, and family ownership are used as independent variables, while financial constraints are used as the dependent variable. Results: The results show that digitalization has a positive and significant effect on financial constraints. Managerial ownership also has a positive and significant effect on financial constraints, while family ownership has a positive effect on financial constraints. The independent variables explain approximately 97.15% of the variation in financial constraints. Conclusion: The findings indicate that digitalization, managerial ownership, and family ownership tend to increase financial constraints. This study provides important managerial implications, suggesting that firms need to carefully manage digital investment decisions alongside sound cash flow and financing strategies. Furthermore, higher managerial and family ownership should be balanced with improved transparency and disclosure quality to reduce concerns from creditors and investors.