Determinant of Financial Distress

Empirical Study of Manufacturing Companies Listed on the Indonesia Stock Exchange and Malaysia Stock Exchange Period 2017 – 2018

DOI

10.2991/aer.k.210121.016How to use a DOI?

Keywords

Liquidity, Leverage, Activity, Profitability, The Board of Directors, Audit Committee

Abstract

This study aims to examine the effect of financial performance and corporate governance mechanisms on financial distress. The financial performance used in this study was liquidity, leverage, activity, and profitability, while the corporate governance mechanism used the Board of Directors and Audit Committee. The subjects used in this study were Manufacturing Companies listed on the Indonesia Stock Exchange and Malaysia Stock Exchange for the period 2017 - 2018. The sampling technique employed purposive sampling. The number of manufacturing companies sampled was 61 companies from a total of 260 on the IDX and 62 companies from 236 companies on the KLSE. The analysis method utilized multiple linear regression using the SPSS 16 program. This study’s results indicated that liquidity, activity, and probability negatively affected both Indonesia’s and Malaysia’s financial distress. Meanwhile, the other variables: leverage, the Board of Directors, and the Audit Committee did not influence financial distress both in Indonesia and Malaysia. Also, there were differences in the financial distress level in Indonesia and Malaysia. Besides, there were differences in the impact of liquidity, leverage, activity, profitability, the Board of Directors, and the Audit Committee on financial distress in Indonesia and Malaysia.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

TY  - CONF
AU  - Barbara Gunawan
AU  - Hutomo Cahya Putra
PY  - 2021
DA  - 2021/01/21
TI  - Determinant of Financial Distress
BT  - Proceedings of the 4th International Conference on Sustainable Innovation 2020-Accounting and Management (ICoSIAMS 2020)
PB  - Atlantis Press
SP  - 113
EP  - 120
SN  - 2352-5428
UR  - https://doi.org/10.2991/aer.k.210121.016
DO  - 10.2991/aer.k.210121.016
ID  - Gunawan2021
ER  -