Risk, Stock, and Bond Value in Indonesia Public Companies

Indonesian stock market are unpopular sources of capital for companies. Stock market have 2 main products that is stock and bond. Bond is much more unpopular than stock. This study will examine the relations between risk, stock return, and bond returns relation in Indonesian Public Companies. Sample are 51 companies that listed in Indonesian Stock Exchange and issues bond during 2011-2018. Risk as endogen variable measured by Altman Z score. Stock values as exogenous variables using stock returns and dividend yields as indicators. Endogen variable bond value having bond returns and Yield to maturity as measurements. Data then analysed using warp PLS. The results shows that stock returns are mediating the relations between bankruptcy risk and bond return in Indonesia. This is consistent with optimal capital structure and financial distress theory. Companies usually choose to issued stock rather than bond. If it choose both, it will be like to use stock rather than bond. Hence, investor also choose in the stock when companies risk is higher rather than bond. Keywords—bankruptcy risk, stock value, bond value