Financial Risk, Debt, and Efficiency in Indonesia’s Construction Industry: A Comparative Study of SOEs and Private Companies

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The article explores the financial performance of Indonesian SOEs and compares construction performance ratios and DEAs with privately owned companies.

The introduction presents the gap, the impact of COVID-19 , presents the environment of the study, the problem is very well formulated, and the methodology is summarized. 

To note:

- The introduction lacks a statement regarding the next section's distribution.

- The gap presented by the author is the challenges SOEs are facing after the COVID-19 crisis. The Gap in my opinion does not match with the methodology and comparison made.

- The sample used is the years between 2015 and 2022, which means, it represents the performance way before COVID-19. 

- the methodology used compares two types of companies, but not before and after COVID-19 (which is the reason behind the research)

- the methodology is basic, the authors should search for a more advanced methodology based on the literature to compare ratios between two samples,  using paired t-tests is not enough in my opinion.

- The literature paragraphs are well written, but based on the variables and measures used more references should be included. Used references are relatively recent, and adding 2024 references would better serve the quality of the article.

- Sections 3.2 and 3.3 represent a theoretical overview of the measures of performance and efficiency used, which in my opinion should be linked to literature and previous similar studies.

- The methodology should be reconsidered. Existing results are represented by ratio, based on the methodology used. A discussion should follow the results part, independently from the conclusion.

- The conclusion should be rewritten covering a summary of the case, the literature, the methodology, the results and the recommendations.

Author Response

Uncovering Financial Performance and Efficiency: A Glimpse into Indonesia's State-Owned Enterprises (SOEs) Construction Industry Debt and Financial Risk

 

Response to Reviewer 1 Comments
1. Summary
Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in yellow in the re-submitted files.
2. Questions for General Evaluation	Reviewer’s Evaluation	Response and Revisions
Does the introduction provide sufficient background and include all relevant references?	Must be improved	All responses and revisions are available in the next section
Are all the cited references relevant to the research?	Must be improved
Is the research design appropriate?	Can be improved
Are the methods adequately described?	Must be improved
Are the results clearly presented?	Must be improved
Are the conclusions supported by the results?	Must be improved
3. Point-by-point response to Comments and Suggestions for Authors
Comments 1: The introduction lacks a statement regarding the next section's distribution.
Response 1: Thank you for pointing this out. We agree with this comment. Therefore, I/we have added a clear description of the structure and content of the remaining sections at lines 107-110 in the manuscript. This addition outlines the progression from the literature review to the methodology, followed by the results, discussion, and concluding with the summary of the main findings, ensuring a cohesive flow and improved readability of the paper.
Comments 2: The gap presented by the author is the challenges SOEs are facing after the COVID-19 crisis. The Gap in my opinion does not match with the methodology and comparison made.
Response 2: Thank you for pointing this out. We appreciate the opportunity to clarify our research focus. Indeed, while the COVID-19 crisis has generally exacerbated financial performances across various sectors, our research does not identify the pandemic as the primary gap. Instead, we aim to explore the persistent negative financial trends among SOEs during the recent periods and assess whether similar trends are observable in private companies. This approach helps determine whether the downturns are industry-wide or specific to state-owned enterprises, possibly indicating issues with governance or management within SOEs. We have emphasized this distinction in the revised introduction on lines 94-106.

 

Comments 3: The sample used is the years between 2015 and 2022, which means, it represents the performance way before COVID-19.

Response 3: Thank you for pointing this out. Therefore, we have clarified in our revised manuscript that while our study encompasses the years 2015 to 2022, our analysis is not primarily designed to assess pre- and post-COVID-19 impacts (see Response 2). Instead, the inclusion of recent years where COVID-19 is relevant serves to understand the broader financial trends. This approach allows us to observe the performance in a natural setting where all entities experienced financial downturns due to the pandemic. We have emphasized that our objective is to assess overarching trends across these years. This clarification is detailed in the introduction and methodology sections of the revised manuscript to ensure the focus of our study is accurately understood.

 

Comments 4: The methodology used compares two types of companies, but not before and after COVID-19 (which is the reason behind the research)

Response 4: Thank you for pointing this out. As mentioned in Responses 2 and 3, the inclusion of the years 2015 to 2022 in our study is intended to capture broader financial trends, not specifically to assess pre- and post-COVID-19 impacts. We have clarified this approach in the revised manuscript to ensure that the objectives and scope of our research are accurately understood.

 

Comments 5: The methodology is basic, the authors should search for a more advanced methodology based on the literature to compare ratios between two samples,  using paired t-tests is not enough in my opinion.

Response 5: Thank you for pointing this out. We recognize the importance of using robust methodologies in our research. Accordingly, we have explained in the revised manuscript on lines 52-63 why a parsimonious approach was adopted for this study. Despite its simplicity, the paired t-test is statistically valid and particularly well-suited for our dataset, which comprises fewer than 30 observations per group. This test effectively measures the mean differences between paired observations, crucial for our comparative analysis of SOEs and private companies. Furthermore, the use of the paired t-test facilitates straightforward interpretation, thereby making our findings accessible to a wider audience while maintaining statistical integrity

 

Comments 6: The literature paragraphs are well written, but based on the variables and measures used more references should be included. Used references are relatively recent, and adding 2024 references would better serve the quality of the article.

Response 6: Thank you for pointing this out. Regarding the selection of variables and methodologies, our study primarily employs financial ratios as outlined by Peterson (2013), which are widely recognized standards for this type of analysis. These ratios were chosen due to their established relevance and utility in financial performance assessment, rather than through a variable selection process typical of regression modeling. Regarding the inclusion of 2024 literature, our study focuses on the compilation and analysis of financial performance in state-owned construction companies, which typically update their financial data annually. Therefore, the scope of recent literature is naturally limited by the availability of such data. This study is not driven by methodological novelty but rather aims to provide new insights into the financial performance of SOEs in the construction sector. We acknowledge the potential value of incorporating the most recent studies and will consider this aspect for possible future updates to our research.

 

Comments 7:    Sections 3.2 and 3.3 represent a theoretical overview of the measures of performance and efficiency used, which in my opinion should be linked to literature and previous similar studies.

Response 7: Thank you for pointing this out. We would like to clarify that the literature related to the methodologies described in Sections 3.2 and 3.3 has already been presented in the Literature Review section 2. This section includes references to previous studies that have employed similar measures of performance and efficiency.

 

Comments 8: The methodology should be reconsidered. Existing results are represented by ratio, based on the methodology used. A discussion should follow the results part, independently from the conclusion.

Response 8: Thank you for pointing this out. We agree with this comment and appreciate the opportunity to enhance our manuscript's clarity and structure. Therefore, we have standardized all ratios to be presented as percentages across all tables, figures, and the body text to maintain consistency and improve readability. Additionally, we have addressed the issue with the subsection headings which previously might have led to confusion between the discussion and conclusion sections. These sections are now clearly separated, and the revisions have been highlighted in yellow in the revised manuscript to ensure that changes are easily identifiable.

 

Comments 9: The conclusion should be rewritten covering a summary of the case, the literature, the methodology, the results and the recommendations.

Response 9: Thank you for pointing this out. We agree with this comment. Therefore, we have thoroughly revised the conclusion section to incorporate a succinct summary of the case study, the methodologies employed, our key findings, and the resulting recommendations.

4. Additional clarifications: We’ve addressed all the reviewers' comments, particularly focusing on the research gap, methodology, and results over the last 10 days. If there are still areas that require further improvement, we hope to have the opportunity to refine them in a second round of revisions. Thank you

 

Author Response File: Author Response.docx

Reviewer 2 Report

Comments and Suggestions for Authors

The lengthy and somewhat complicated title, "Uncovering Financial Performance and Efficiency: A Glimpse into Indonesia's State-Owned Enterprises (SOEs) Construction Industry Debt and Financial Risk," is excessive. It might be more precise and more concise, reflecting the study's emphasis on comparing the efficiency and financial performance of SOEs and private enterprises.

 

Although the abstract gives a broad summary, it is vague on the approach and essential conclusions. A more concise summary of the findings and their implications would be beneficial.

 

While the introduction gives some context, it might be strengthened by providing further history on the significance of infrastructure development in Indonesia and the unique difficulties encountered by State-Owned Enterprises (SOEs) in the construction industry.

 

A more comprehensive literature analysis would help place this work within the larger body of research and emphasize its distinctive contributions. Previous investigations are mentioned briefly.

 

Although Peterson's (2013) financial ratio analysis methodology and the DEA method are referenced, there isn't a clear explanation for why these particular approaches are preferred over others. The reasons these techniques are especially appropriate for this investigation require more justification.

 

It's unclear what criteria were used to choose the five private businesses and the four SOEs. It would be useful to know why these particular firms were chosen and to what extent they reflect the industry as a whole.

 

It seems sense that the study uses data from 2015 to 2022. It is important to have a discourse on the potential impact of economic conditions, such as the COVID-19 epidemic, on the financial data and if any modifications or changes were implemented to accommodate for these variables.

 

The results are presented in a disorganized and inconsistent manner. Readability and clarity would be improved with tables and figures that summarize the main conclusions.

 

Although SOEs and private enterprises are compared in the study, the analysis does not go into great detail to explain the observed discrepancies in financial performance and efficiency. It is important to go into further detail about the underlying causes of these discrepancies in our discussion.

 

The results should be interpreted more carefully in the discussion section. Right now, it reads more like a recap than an analysis linking the results to more general business and economic trends.

 

The paper mentions significant policy implications, although it doesn't go into great detail about them. Based on the study's results, more thorough advice for decision-makers in government and business would be extremely valuable.

 

The limits of the investigation are not clearly discussed. Recognizing the limits of each study would offer a more unbiased perspective and aid in the direction of subsequent investigations.

 

The paper's professionalism and readability are diminished by the numerous grammatical mistakes and poor language. Editing and proofreading must be done thoroughly.

 

The paper cites a number of papers, although it doesn't always use the same citation style. Academic rigor requires accurate and consistent citation style.

 

Appendices are referenced, however their integration into the main text is not very strong. Appendices should be clearly referenced and pertinent to the topic at hand.

 

Although this article tackles an important and pertinent subject, it still needs to be significantly improved in terms of organization, readability, and analytical depth. The authors can improve the paper's contribution to knowledge on the efficiency and financial performance of Indonesia's construction industry SOEs in comparison to private enterprises by addressing the problems mentioned above.

Comments on the Quality of English Language

The lengthy and rather complicated title, "Uncovering Financial Performance and Efficiency: A Glimpse into Indonesia's State-Owned Enterprises (SOEs) Construction Industry Debt and Financial Risk," is excessive. It might be clearer and more succinct, reflecting the study's emphasis on comparing the efficiency and financial performance of SOEs and private enterprises.

 

Although the abstract gives a broad summary, it is vague on the approach and important conclusions. A more concise summary of the findings and their implications would be beneficial.

 

While the introduction gives some context, it might be strengthened by providing further history on the significance of infrastructure development in Indonesia and the unique difficulties encountered by State-Owned Enterprises (SOEs) in the construction industry.

 

A more comprehensive literature analysis would help place this work within the larger body of research and emphasize its distinctive contributions. Previous investigations are mentioned briefly.

 

Although Peterson's (2013) financial ratio analysis methodology and the DEA method are referenced, there isn't a clear explanation for why these particular approaches are preferred over others. The reasons these techniques are especially appropriate for this investigation require more justification.

 

It's unclear what criteria were used to choose the five private businesses and the four SOEs. It would be useful to know why these particular firms were chosen and to what extent they reflect the industry as a whole.

 

It seems sense that the study uses data from 2015 to 2022. It is important to have a discourse on the potential impact of economic conditions, such as the COVID-19 epidemic, on the financial data and if any modifications or changes were implemented to accommodate for these variables.

 

The results are presented in a disorganized and inconsistent manner. Readability and clarity would be improved with tables and figures that summarize the main conclusions.

 

Although SOEs and private enterprises are compared in the study, the analysis does not go into great detail to explain the observed discrepancies in financial performance and efficiency. It is important to go into further detail about the underlying causes of these discrepancies in our discussion.

 

The results should be interpreted more carefully in the discussion section. Right now, it reads more like a recap than an analysis linking the results to more general business and economic trends.

 

The paper mentions significant policy implications, although it doesn't go into great detail about them. Based on the study's results, more thorough advice for decision-makers in government and business would be extremely valuable.

 

The limits of the investigation are not clearly discussed. Recognizing the limits of each study would offer a more unbiased perspective and aid in the direction of subsequent investigations.

 

The paper's professionalism and readability are diminished by the numerous grammatical mistakes and poor language. Editing and proofreading must be done thoroughly.

 

The paper cites a number of papers, although it doesn't always use the same citation style. Academic rigor requires accurate and consistent citation style.

 

Appendices are referenced, however their integration into the main text is not very strong. Appendices should be clearly referenced and pertinent to the topic at hand.

 

Although this article tackles an important and pertinent subject, it still needs to be significantly improved in terms of organization, readability, and analytical depth. The authors can improve the paper's contribution to knowledge on the efficiency and financial performance of Indonesia's construction industry SOEs in comparison to private enterprises by addressing the problems mentioned above.

Author Response

Uncovering Financial Performance and Efficiency: A Glimpse into Indonesia's State-Owned Enterprises (SOEs) Construction Industry Debt and Financial Risk

 

Response to Reviewer 2 Comments
1. Summary
Thank you very much for taking the time to review this manuscript. Please find the detailed responses below and the corresponding revisions/corrections highlighted/in red changes in the re-submitted files.
2. Questions for General Evaluation	Reviewer’s Evaluation	Response and Revisions
Does the introduction provide sufficient background and include all relevant references?	Not applicable	All responses and revisions are available in the next section.
Are all the cited references relevant to the research?	Must be improved
Is the research design appropriate?	Not applicable
Are the methods adequately described?	Not applicable
Are the results clearly presented?	Not applicable
Are the conclusions supported by the results?	Not applicable
3. Point-by-point response to Comments and Suggestions for Authors
Comments 1: The lengthy and somewhat complicated title, "Uncovering Financial Performance and Efficiency: A Glimpse into Indonesia's State-Owned Enterprises (SOEs) Construction Industry Debt and Financial Risk," is excessive. It might be more precise and more concise, reflecting the study's emphasis on comparing the efficiency and financial performance of SOEs and private enterprises.
Response 1: Thank you for pointing this out. We agree with this comment. Therefore, we have revised the title to be more concise and reflective of our study's focus. The new title is 'Financial Risk, Debt, and Efficiency in Indonesia's Construction Industry: A Comparative Study of SOEs and Private Companies.’ This title more directly captures the essence of our comparative analysis and the key aspects we examined.
Comments 2: Although the abstract gives a broad summary, it is vague on the approach and essential conclusions. A more concise summary of the findings and their implications would be beneficial.
Response 2: Thank you for pointing this out. We agree with this comment. Therefore, we have revised the abstract to be more concise and have included a clear summary of the findings and their implications.

 

Comments 3: While the introduction gives some context, it might be strengthened by providing further history on the significance of infrastructure development in Indonesia and the unique difficulties encountered by State-Owned Enterprises (SOEs) in the construction industry.

Response 3: Thank you for pointing this out. We agree with this comment. Therefore, we have updated the introduction to include this information, which can now be found on lines 29 and 34 of the revised manuscript.

 

Comments 4: A more comprehensive literature analysis would help place this work within the larger body of research and emphasize its distinctive contributions. Previous investigations are mentioned briefly.

Response 4: Thank you for pointing this out. We appreciate your feedback and believe that we have already provided a comprehensive literature analysis in Section 2 of our manuscript. This section thoroughly discusses the existing body of research, positioning our study within the larger academic context and delineating its distinct contributions.

 

Comments 5: Although Peterson's (2013) financial ratio analysis methodology and the DEA method are referenced, there isn't a clear explanation for why these particular approaches are preferred over others. The reasons these techniques are especially appropriate for this investigation require more justification

Response 5: Thank you for pointing this out. We agree with the importance of clearly justifying our methodological choices. We have discussed the reasons for choosing Peterson's (2013) financial ratio analysis and the DEA method based on previous studies in the Literature Review (Section 2) and have further elaborated on these concepts in Section 3. It is possible that language limitations have made the explanations less clear. Although the manuscript has undergone proofreading, we acknowledge that it may not have been fully optimized. Moving forward, we will undertake a more thorough translation and proofreading process to ensure clarity and precision in our explanations.

 

Comments 6: It's unclear what criteria were used to choose the five private businesses and the four SOEs. It would be useful to know why these particular firms were chosen and to what extent they reflect the industry as a whole

Response 6: Thank you for pointing this out. We agree with the importance of clarity in sample selection. To address this, we have already provided a detailed explanation of our criteria for selecting the nine largest construction companies by capitalization, which includes four state-owned and five private companies, in Section 3.1 of the manuscript.

 

Comments 7: It seems sense that the study uses data from 2015 to 2022. It is important to have a discourse on the potential impact of economic conditions, such as the COVID-19 epidemic, on the financial data and if any modifications or changes were implemented to accommodate for these variables.

Response 7: Thank you for pointing this out. We agree with the importance of acknowledging the impact of significant economic conditions such as the COVID-19 epidemic. However, our study does not focus specifically on the effects of COVID-19, as the financial downturn during the pandemic naturally affected both state-owned enterprises (SOEs) and private companies alike. Additionally, our methodology does not involve causal modeling such as regression analysis, which could be highly susceptible to structural breaks due to crises like COVID-19. Instead, our analysis provides a broader overview of financial performance from 2015 to 2022 without specifically isolating the pandemic's impact.

 

Comments 8: The results are presented in a disorganized and inconsistent manner. Readability and clarity would be improved with tables and figures that summarize the main conclusions.

Response 8: Thank you for pointing this out. We agree with this comment. Therefore, we have added a bridging section at the beginning of Section 4: Results to improve the organization and consistency of the presentation.

 

Comments 9: Although SOEs and private enterprises are compared in the study, the analysis does not go into great detail to explain the observed discrepancies in financial performance and efficiency. It is important to go into further detail about the underlying causes of these discrepancies in our discussion

Response 9: Thank you for pointing this out. We agree with this comment and would like to clarify that we have acknowledged this limitation in the last paragraph of the discussion section. Specifically, we have stated that our study uses only secondary data, which provides a superficial level of analysis. To gain a deeper understanding of the discrepancies in financial performance and efficiency between SOEs and private construction companies, further strategic studies with primary data collection are necessary. Such an approach could address the limitations of this research and offer more comprehensive insights into the underlying causes of these discrepancies.

 

Comments 10: The results should be interpreted more carefully in the discussion section. Right now, it reads more like a recap than an analysis linking the results to more general business and economic trends

 

Comments 11: The paper mentions significant policy implications, although it doesn't go into great detail about them. Based on the study's results, more thorough advice for decision-makers in government and business would be extremely valuable

 

Comments 12: The limits of the investigation are not clearly discussed. Recognizing the limits of each study would offer a more unbiased perspective and aid in the direction of subsequent investigations

 

Response 10, 11, 12: Thank you for pointing this out. In response to comments 10, 11, and 12, we would like to clarify that this study primarily focuses on initial identification based on secondary data. Therefore, an in-depth analysis of underlying causes, root issues, and related aspects is beyond the scope of this research due to data limitations and the risk of speculative assumptions.

We hope that this study will serve as a foundation for future research to delve deeper into the specific corporate governance and management practices of the companies involved. Such research could provide a more comprehensive understanding of the factors influencing company performance and offer more targeted recommendations for stakeholders. We appreciate your understanding of the limitations of this study and believe that future research building upon this foundation will contribute significantly to the field.

 

Comments 13: The paper's professionalism and readability are diminished by the numerous grammatical mistakes and poor language. Editing and proofreading must be done thoroughly.

 

Comments 14: The paper cites a number of papers, although it doesn't always use the same citation style. Academic rigor requires accurate and consistent citation style.

 

Comments 15: Appendices are referenced, however their integration into the main text is not very strong. Appendices should be clearly referenced and pertinent to the topic at hand.

 

Response 13, 14, 15: Thank you for bringing these points to our attention. We acknowledge the presence of grammatical errors and language inconsistencies that have detracted from the overall professionalism and readability of the paper. While the manuscript has undergone proofreading, it is evident that it requires further refinement. We also recognize the importance of maintaining a consistent citation style throughout the paper for academic rigor. In subsequent revisions, we will meticulously review and standardize all citations to ensure adherence to a single, recognized format. Furthermore, we will strengthen the integration of the appendices into the main text by providing clearer references and ensuring their direct relevance to the topics discussed. Moving forward, we are committed to a more comprehensive review process that includes professional translation and proofreading to ensure clarity, precision, and adherence to academic standards. We appreciate your constructive feedback and will strive to address these issues in future revisions.

 

Comments 16: Although this article tackles an important and pertinent subject, it still needs to be significantly improved in terms of organization, readability, and analytical depth. The authors can improve the paper's contribution to knowledge on the efficiency and financial performance of Indonesia's construction industry SOEs in comparison to private enterprises by addressing the problems mentioned above.

Response 16: Thank you for your comprehensive review and insightful feedback. We appreciate your recognition of the importance and relevance of the topic addressed in our paper. We acknowledge the need for significant improvements in organization, readability, and analytical depth, as you have rightly pointed out. We are committed to addressing all the issues raised in your comments and those of other reviewers. We believe that by incorporating your valuable suggestions, we can enhance the quality of our paper and make a more meaningful contribution to the existing body of knowledge on the efficiency and financial performance of Indonesia's construction industry SOEs compared to private companies. We hope that the revisions we undertake in response to your feedback will result in a paper that meets the high standards of academic rigor and effectively communicates our findings. We sincerely appreciate your time and effort in providing us with such constructive criticism.

 

 

4. Point-by-point response to Comments and Suggestions for Authors

Point 1: The paper's professionalism and readability are diminished by the numerous grammatical mistakes and poor language. Editing and proofreading must be done thoroughly.

Response 1: We acknowledge the presence of grammatical errors and language inconsistencies that have detracted from the overall professionalism and readability of the paper. While the manuscript has undergone proofreading, it is evident that it requires further refinement. Moving forward, we are committed to a more comprehensive review process that includes professional translation and proofreading to ensure clarity, precision, and adherence to academic standards. We appreciate your constructive feedback and will strive to address these issues in future revisions.

 

5. Additional clarifications: We have carefully addressed all reviewer comments within the given time frame, particularly focusing on the introduction section. However, we acknowledge that the discussion section and some grammatical errors still need further improvement. Due to the tight deadline, we were unable to refine these aspects as thoroughly as we would have liked.

We are committed to delivering a high-quality manuscript and kindly request the opportunity for a second round of revisions. This would allow us to fully address the remaining issues and ensure the paper meets the approriate standards. We apologize for any shortcomings in the current version and appreciate your understanding and consideration of our request.

 

 

Author Response File: Author Response.docx

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

Modifications were done.

Reviewer 2 Report

Comments and Suggestions for Authors

Paper is ok