The Structure of Good Corporate Governance and Financial Indicators as Predictor of Financial Distress in Mining Sector Company in Indonesia

Abstract

The purpose of the paper are: (1) to examine financial indicators, including: current ratio, return on assets, debt to assets ratio, and total asset turn over as a predictor of financial distress in mining sector companies in Indonesia; (2) to examine the structure of Good Corporate Governance including: independent commissioner, audit committee, board of directors, independent audit committee ratios with non-independent, and institutional ownership ratio with managerial ownership as predictor of financial distress in mining sector company in Indonesia. Type of research is quantitative explanatory research. Sampling technique is used purposive sampling method, as many as 20 companies in the mining sector in Indonesia. Analytical techniques in this study uses logistic regression. The results of the research show that: current ratio, debt to asset ratio, total asset turnover, and institutional ownership ratio with managerial ownership are not predictors of financial distress in mining sector in Indonesia. However, return on Assets, independent commissioners, audit committees, boards of directors and independent audit committee ratios with non-independent are predictors of financial distress in mining companies in Indonesia.

Financial Ratio, Board Diversity and Financial Distress: Evidence from Indonesia

“…It can be concluded that independent commissioners are one of the factors that determine whether companies in the manufacturing sector will avoid financial difficulties. The results of this study are in accordance with those previously stated by [10] only. the board of auditors has a negligible negative influence in times of financial distress.…”

“…The main role of independent commissioners is to monitor the performance of directors related to finances that can harm the company. The greater the proportion of independent commissioners, the lower the financial distress [10,11].…”

Analisis Financial Distress Pada Perusahaan Sektor Transportasi dan Logistik Yang Terdaftar di Bursa Efek Indonesia Periode 2018-2022

“…Penurunan laba bersih secara signifikan serta meningkatnya hutang perusahaan menjadi tanda awal perusahaan mengalami kebangkrutan. Kenaikan hutang yang diikuti oleh menurunnya laba secara terus menerus akan mengarah pada terjadinya financial distress seperti yang dinyatakan oleh Sumani (2019) Dengan analisis financial distress ini akan diketahui kondisi financial distress pada perusahaan sektor transportasi dan logistik untuk memperbaiki kinerja keuangan serta menjadi acuan bagi investor dan kreditur karena sangat penting bagi pihak eksternal mengetahui kondisi perusahaan untuk menjamin keamanan investasi modal mereka, sehingga analisis financial distress terhadap perusahaan sangat diperlukan dalam pengambilan keputusan investasi.…”

Determinasi Financial Distress Terhadap Return Saham

“…Modal kerja yang baik meningkatkan kepercayaan investor untuk menanamkan modalnya agar mendapatkan return saham yang dikehendaki. Penelitian terdahulu (Effendi et al, 2016;Kewal & VallentliyAnggraini, 2020;Oktaviani, 2020) (Sumani, 2019). Tingginya penjualan akan menghasilkan laba yang bertumbuh berkelanjutan.…”