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This objective of this paper is to examine the effect of the use of special purpose entities (SPEs) on firm value. Applying a multiple regression analysis on a sample of 124 Indonesian listed nonfinancial firms during the year 2015 and using Tobin's Q ratio as a proxy for firm value, this paper finds a positive relation between the use of SPEs and firm value. The results show that the effect of the use SPEs on firm value is statistically and economically significant, where firms that use SPEs have a 21.52% higher value than firms that do not use SPEs. The sources of higher firm value might result from lower cost of capital, higher after-tax cash flows, and increased information value of reported earnings associated with the use of SPEs to serve tax planning, financing, and financial reporting objectives. Keywords— special purpose entities; securitization; bankruptcy costs; tax planning; earnings management; firm value

Does the Use of Special Purpose Entities Affect Firm Value? Evidence from Indonesian Listed Nonfinancial Firms