Abstract for: Too Much “Debt” will “Default” You: The Case of Listed Default Companies in Indonesia

This paper aims to analyze the dynamic relationship between debt and company’s performance which can cause default in Indonesia. System dynamics model is used to evaluate the elationship between debt and company’s performance which can cause default. Each company may have each archetype for the default case, this research may estimate early warning system for default. It was discovered that default is caused by the intention of the company to add and to expand capital expenditure aggressively, but these companies did not generate adequate income to pay the matured debt. In addition, significant decreasing demand and the price of the product severed the condition. This particular research paper was only focused on the relationship between debt and company’s performance to pay the matured debt. Other variables may be considered as those having a small effect. This may be the first paper that analyzes debt effect to company in default condition using system dynamic model in Indonesia.