Determining Factors in the Indirect Financial Distress Cost in Companies in the Basic and Chemical Industry Sector Listed on the Indonesia Stock Exchange


Authors : Devina Moristy Annisa Putri; Shafa Tasya Cantika; Rayinta Cahaya Ningtyas; Farah Margaretha Leon

Volume/Issue : Volume 6 - 2021, Issue 12 - December

Google Scholar : http://bitly.ws/gu88

Scribd : https://bit.ly/3GTU98C

DOI : https://doi.org/10.5281/zenodo.5875180

This study is carried out to determine whether the determining factors for financial distress really do matter significantly to these financial difficulties. Independent variables in this study are leverage, firm size, tangible and intangible assets, Tobins' Q, liquid assets, and change in investment policy. This study gathered data from 17 companies in the basic industry and chemicals listed in the Indonesian Stock Exchange in 6 years (2015-2020) by using multiple regression models to test it. The findings in this study indicate that the size of the company, Tobins' Q, tangible and intangible assets, and changes in investment policy have no significant effect on financial distress. While leverage and liquidity assets have a significant negative effect on financial distress. The results of this study are expected to provide advice and recommendations to companies in managing their company’s finances and establishing good investment policies so that the company’s finances remain stable also maintain the level of leverage doesn’t increase so that the company does’t experience financial distress. When a decrease in the level of the company's liquidity position will increase financial difficulties, the company is not in a position to commit when it matures. Companies with low leverage will have a tendency to protect all shareholders so as not to cause financial difficulties. That's when investors can invest in companies in these conditions and the results can provide an early signal as a sign to managers

Keywords : Indirect financial distress cost; investment policy; financial distress; basic industry and chemicals sector.

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31 - December - 2022

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