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This paper examines the moderating impact of capital structure on the relationship between government subsidy, strategic profitability and financial strength of state-owned enterprises in Indonesia. A purposive sampling is used and data were collected from seven state-owned enterprises over the period of 2005 to 2016. The empirical evidence provided by this paper indicates that government subsidy has a significant negative impact on the financial strength, which means that the state-owneddoi:10.21511/imfi.14(3).2017.13 fatcat:q5ybhwuip5ghpex7jpzdlgnbze