Effect of Corporate Governance Mechanism and Operating Cash Flow on Financial Distress

Sembiring, Etti Ernita

doi:10.34208/jba.v24i2.1133

Cited by 6 publications

(6 citation statements)

References 20 publications

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“…The reason why this research uses the type of manufacturing companies is because manufacturing companies are the largest companies listed on the Indonesia Stock Exchange, besides manufacturing companies are one of the types of companies that contribute the most carbon emissions in Indonesia. In this study, financial distress is measured using operating cash flow adequacy [5] and Altman Z-score value [6]. This study uses the Common Effect Model (CEM) and Random Effect Model (REM).…”

Section: Methodsmentioning

confidence: 99%

Disclosure of CO2 emissions, community complaints, occupational safety and its relation to financial distress

Sembiring,

Irawan,

Kusumastuti

et al. 2024

E3S Web of Conf.

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The Indonesian government is committed to resolving emission issues through the development of green industries. The government encourages industries to transform into sustainable industries that are environmentally friendly. The Indonesian government asks the public and the market to put pressure on the industry to improve its environmental performance. The public can monitor and pressure companies through the disclosure of environmental performance information such as disclosure of CO2 emissions. In addition to environmental performance, disclosure of corporate social performance is no less important. Social performance relates to the company’s responsibility towards employees (work accidents) and the surrounding community (community complaints). The risk of companies that have poor environmental performance and social performance can result in the company experiencing financial distress. This study aims to examine the effect of disclosure of CO2 emissions, community complaints, and work safety on Financial Distress. Financial Distress is measured using the Altman Z Score and operational cash flow adequacy. This study uses age and company size as control variables. The sample of this study is manufacturing companies listed on the Indonesia Stock Exchange from 2018-2021. This study uses the Common Effect Model (CEM) and Random Effect Model (REM). The results of the research show Disclosure of CO2 emissions, community complaints, occupational safety has no significant effect on financial distress. However, firm age and firm size have a significant positive effect on the adequacy of the firm’s operating cash flow.

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Section: Methodsmentioning

confidence: 99%

Disclosure of CO2 emissions, community complaints, occupational safety and its relation to financial distress

Sembiring,

Irawan,

Kusumastuti

et al. 2024

E3S Web of Conf.

Self Cite

View full text Add to dashboard Cite

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“…The results showed that cash flow ratio had a negative effect, and firm size had no effect on financial distress. Sembiring (2022) examined the effect of corporate governance mechanisms and operating cash flows on financial distress. The study used data from manufacturing companies with negative EBIT values for two years from 2017-2019.…”

Section: Empirical Reviewmentioning

confidence: 99%

Cash Flow Ratios and Business Failure of Healthcare Firms in Nigeria

Okeke,

Nwoha,

Duru

2024

IJBMR

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The study examined cash flow ratios as predictors of business failure of healthcare firms in Nigeria. The objectives of the study were to ascertain the effect of operating cash flow ratio, cash flow to debt ratio, and price to cash flow ratio on Altman’s zeta score of healthcare firms in Nigeria. The study adopted ex-post-facto research design, covering a period of 10 years (from 2013 to 2022). Secondary data used for the study were extracted from annual reports and accounts of selected healthcare firms listed on the Nigeria Exchange Group (NGX) from 2013 to 2022. Multiple regression technique was used to test the hypotheses. The result of the test of hypotheses revealed that the operating cash flow ratio has a statistically non-significant negative effect on the Altman z-score of healthcare firms in Nigeria (p-value = 0.3397). The finding also indicates that the cash flow to debt ratio has a statistically non-significant negative effect on the Altman z-score of healthcare firms in Nigeria (p-value = 0.2937). Lastly, the finding reveals that the price to cash flow ratio has a non-significant positive effect on the Altman z-score of healthcare firms in Nigeria (p-value = 0.5281). The policy implications of these findings suggest that when assessing the financial health and bankruptcy risk of healthcare firms in Nigeria, policymakers and regulators should consider factors beyond cash flow ratios. It was recommended therefore that healthcare firms in Nigeria should diversify their sources of cash flow beyond operating cash flow to improve financial stability and mitigate bankruptcy risk. Healthcare firms should have a careful evaluation of debt management practices is necessary to maintain a healthy balance between cash flow generation and debt obligations in healthcare firms. Market sentiment reflected in the price to cash flow ratio should not be relied upon as the sole indicator of financial stability. Healthcare firms should prioritize fundamental financial and operational indicators to assess their financial health and mitigate bankruptcy risk.

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“…Researchers use operational cash flow because the adequacy of operational cash flow is able to show the company"s ability to finance the company's operations and pay debts due. Sembiring (2022) [18] states that companies that do not have sufficient operating cash have a greater probability of experiencing financial distress than companies that have sufficient operating cash.…”

Section: Variable Operational Definitionmentioning

confidence: 99%

The Effect of Financial Performance on Investor Reaction With the Timeliness of Financial Statement Submission as a Mediation Factor

Sembiring,

Syarief,

Indrawati

et al. 2023

jakb

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Abstrak Penelitian ini bertujuan untuk menguji pengaruh kinerja keuangan perusahaan dan keterlambatan penyampaian laporan keuangan terhadap reaksi investor. Penelitian ini juga menguji apakah keterlambatan penyampaian laporan keuangan memediasi pengaruh kinerja keuangan terhadap reaksi investor. Pada tahun 2020, Bursa Efek Indonesia (BEI) mengeluarkan kebijakan stimulus dan relaksasi untuk menjaga stabilitas pasar modal dengan memperpanjang waktu penyampaian laporan keuangan tahunan selama dua bulan dari batas waktu. Namun hingga batas waktu perpanjangan, masih banyak perusahaan yang belum menyampaikan laporan keuangannya. Sampel dalam penelitian ini adalah perusahaan yang terlambat menyampaikan laporan keuangan tahun 2020. Penelitian ini menggunakan alat analisis Warp PLS dan Sobel. Hasil penelitian menunjukkan perusahaan yang terlambat menyampaikan laporan keuangan mengalami kinerja keuangan yang kurang baik. Kinerja keuangan berpengaruh positif terhadap harga saham. Kinerja keuangan berpengaruh negatif terhadap keterlambatan penyampaian laporan keuangan. Keterlambatan penyampaian laporan keuangan memediasi pengaruh kinerja keuangan terhadap harga saham. Efek mediasi yang terjadi adalah mediasi kompetitif. Namun berdasarkan hasil alat analisis SOBEL menunjukkan jika mediasi tersebut tidak signifikan. Kata kunci: kinerja keuangan, keterlambatan penyampaian laporan keuangan, harga saham Abstract This study aims to examine the effect of a companyâ€™s financial performance and detain in submitting a financial statement on investor reaction. This study also examines whether the delay in submitting financial statements mediates the effect of financial performance on investor reaction. In 2020, the IDX issued a policy of stimulus and relaxation in maintaining the stability of the capital market by extending the time for submitting annual financial reports for two months from the deadline. However, until the deadline for the extension, there are still many companies that have not submitted their financial reports. The research sample is companies that are late in submitting financial statements in 2020. This study uses Warp PLS and Sobel analysis tools. The result shows that financial performance positively affect the stock price. The financial performance has a negative effect on delays in submitting the financial statement. The delay in submitting a financial statement mediates the effect of financial performance on stock price but the mediation is not significant. Keywords: Financial performance; late submission of financial report; stock price

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Effect of Corporate Governance Mechanism and Operating Cash Flow on Financial Distress

Cited by 6 publications

References 20 publications

Disclosure of CO2 emissions, community complaints, occupational safety and its relation to financial distress

Disclosure of CO2 emissions, community complaints, occupational safety and its relation to financial distress

Cash Flow Ratios and Business Failure of Healthcare Firms in Nigeria

The Effect of Financial Performance on Investor Reaction With the Timeliness of Financial Statement Submission as a Mediation Factor

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