The Effect of Institutional Ownership, Managerial Ownership, Liquidity, and Leverage on Financial Distress
Asian Journal of Economics, Business and Accounting,
Page 170-181
DOI:
10.9734/ajeba/2022/v22i2130700
Abstract
Aims: This study aims to find empirical evidence and analyze the effect of institutional ownership, managerial ownership, liquidity, and leverage on financial distress. In addition, this research can also be used as a reference for further researchers as well as a reference for stakeholders (investors, creditors, and the government) in making relevant and reliable decisions.
Study Design: The method used is quantitative research with secondary data taken from the company's financial statements with data collection techniques using purposive sampling.
Place and Duration of Study: The population in this study are manufacturing companies in the consumer goods industry sector listed on the Indonesia Stock Exchange during 2018-2020. The number of research samples is 63 data.
Methodology: Analysis of the data used is multiple linear regression analysis.
Results: The results of this study indicate that: (1) Institutional Ownership has no significant effect on Financial Distress. (2) Managerial Ownership has no significant effect on Financial Distress. (3) Liquidity has a positive and significant effect on Financial Distress. (4) Leverage has a negative and significant effect on Financial Distress.
Keywords:
- Ownership structure
- liquidity
- leverage
- financial distress
How to Cite
Utami, S. W., & Dirman, A. (2022). The Effect of Institutional Ownership, Managerial Ownership, Liquidity, and Leverage on Financial Distress. Asian Journal of Economics, Business and Accounting, 22(21), 170-181. https://doi.org/10.9734/ajeba/2022/v22i2130700
References
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Loman RK, Malelak MI. Determinants of prediction of financial distress in manufacturing companies on the Indonesia stock exchange. J Res Econ Manag. 2015;15(2):371-381.
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Yudiawati R, Indriani A. Analysis of the effect of current ratio, debt to total asset ratio, total asset turnover, and sales growth ratio on financial distress conditions. Diponegoro J Manag. 2016; 5(2):1-13.
Pulungan KPA. The influence of liquidity and leverage on financial distress in ceramic, porcelain and glass sub-sector companies listed on the stock exchange. Financ J. 2017;3(2):1-9.
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Harianti A. Application of the logistics regression model to predict bankruptcy of delisting companies on the Indonesia sStock exchange for the 2011-2017 period. J Complexity. 2018;5(1):40-57.
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Jensen MC, Meckling WH. Theory of the firm: managerial behavior, agency costs, and capital structure. J Financ Econ. 1976;3(4):305-60.
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Mujiani S, Jum’atul W. Company size as moderating factors affecting financial distress. Acc Fin. 2020;2(2):149-65.
Setiyawan E, Musdholifah. The influence of ownership structure, profitability, liquidity, leverage and exchange rates on financial distress in companies listed on IDX 2016-2017. J Manag Sci (JIM). 2020; 8(1):51-66.
Putri AK, Kristanti FT. Factors affecting financial distress using survival analysis. Sci J Manag Fac Econ. 2020;6(1): 31-42.
Priyatnasari S, Hartono U. Financial ratios, macroeconomics and financial distress: A study on trading, service and investment companies in Indonesia. J Manag Sci. 2019;7:1005-16.
Carolina V. Marpaung EI, Primary DJ, Acc. Financial ratio analysis to predict financial distress conditions (empirical study on manufacturing companies listed on the indonesia stock exchange 2014-2015 period). Maranatha. 2017;9(2):137-45.
Pernamasari R, Purwaningsih S, Tanjung J, Rahayu DP. Good corporate governance and prediction of financial distress to stock prices: atman Z score approach. SSRG-IJEMS. 2019;6(11):56-62.
DOI: 10.14445/23939125/IJEMS-V6I11P107.
Santoso S. Multivariate statistics with SPSS. Jakarta: Elex Media Komputindo; 2017.
Scott WR. Financial accounting theory. 6th ed. Toronto: Pearson Education Canada; 2012.
Setyowati W, Sari NRN. Effect of liquidity, operating capacity, company size and sales growth on financial distress (study on manufacturing companies listed on the stock exchange 2016-2017). J Magisma. 2019;7(2):135-46.
Yustika Y. Effect of liquidity, leverage, profitability, operating capacity and managerial agency costs against financial distress. J Acc. 2015;2(2):1-15.
Ratna I, Marwati. Analysis of factors affecting financial distress conditions in delisting companies from the Jakarta Islamic index in 2012-2016. J Tabarru: Islamic Banking and Finance. 2018; 1(1):51-62.
Zhafirah A, Majidah. Analysis of determinants of financial distress (empirical study on textile and garment sub-sector companies 2013-1017). Acc Fin Research. 2019;7(1):195-202.
Tutliha YS, Rahayu M. Effect of intangible assets, operating cash flow and leverage on financial distress. 2019;2(1):95-103.
Available:https://investasi.kontan.co.id
Andre O, Taqwa S. The effect of profitability, liquidity, and leverage in predicting financial distress (empirical study of various industrial companies listed on the stock exchange in 2006-2010). Institute for accounting research. 2014;2(1):293-312.
Damayanti LD, Yuniarta GA, Sinarwati NK. Analysis of the effect of financial performance, audit committee size and managerial ownership on prediction of financial distress (study on manufacturing companies listed on the Indonesia stock exchange 2011-2015 period). E-journal S1 ak Ganesha University of Education. 2017;7(1):1-12.
Ghozali I. Application of multivariate analysis with IBM SPSS 25 Program. 9th ed. Semarang: Diponegoro University Publishing Agency; 2018.
Hanifah OE, Purwanto A. The influence of corporate governance structure and financial indicators on financial conditions. Diponegoro J Acc. 2013;2(2):1-15.
Available:https://www.cnbcindonesia.com
Purba SIM, Muslih M. The effect of institutional ownership, intellectual capital, and leverage on financial distress (case study on manufacturing companies listed on the Indonesia stock exchange 2014-2017). J Acc Fin Telkom Univ. 2018; 2(2):27-40.
Sujana E, Putri MRC, Kuniawan PS. The effect of corporate governance structure and company size on financial difficulties in property and real estate companies listed on the Indonesia stock exchange. E-journal S1 ak Ganesha University of Education. 2017;8(2).
Septiani NMI, Dana IM. Pengaruh likuiditas, leverage, dan kepemilikan institusional terhadap financial distress pada perusahaan property dan real estate. EJMUNUD. 2019;8(5):3110-37.
DOI:10.24843/EJMUNUD.2019.v08.i05.p19
Dirman A. Financial distress: The impact of institutional ownership, independent commissioners, managerial ownership, and audit committee. Int J Manag Stud Soc Sci Res. 2020;2(4):202-210.
Loman RK, Malelak MI. Determinants of prediction of financial distress in manufacturing companies on the Indonesia stock exchange. J Res Econ Manag. 2015;15(2):371-381.
Hanafi J, Breliastiti, R. The role of good corporate governance mechanisms in preventing companies from experiencing financial distress. Online Journal of Accountants. 2016;1(1):195-220.
Syofyan A, Herawaty V. The effect of good corporate governance on financial distress with audit quality as moderating. National Seminar of Scholars. 2019; 5(2);1-7.
Masita A, Purwohandoko. Analysis of the effect of financial ratios, managerial ownership, and institutional ownership on financial distress in trade, service, and investment sector companies listed on the IDX in 2015-2018. J Manag Sci. 2020; 8(3):894-908.
Dewi PS, Wahyuni PD, Umam DK. The influence of corporate governance and company size on financial distress (empirical study on manufacturing companies listed on the Indonesia stock exchange 2016-2018 period). National Seminar on Accounting (Sena) III Pamulang University. 2020;128-43.
Irham F. Financial performance analysis. Bandung: Alphabeta; 2014.
Widhiari N, Merkusiwati N. Effect of liquidity ratio, leverage, operating capacity, and sales growth on financial distress. E-journal of accounting. 2015;11(2):456-69.
Yudiawati R, Indriani A. Analysis of the effect of current ratio, debt to total asset ratio, total asset turnover, and sales growth ratio on financial distress conditions. Diponegoro J Manag. 2016; 5(2):1-13.
Pulungan KPA. The influence of liquidity and leverage on financial distress in ceramic, porcelain and glass sub-sector companies listed on the stock exchange. Financ J. 2017;3(2):1-9.
Simanjuntak C. The effect of financial ratios on financial distress (study on transportation companies listed on the Indonesia stock exchange for the period 2011-2015). E-proceedings of management. 2017;4(2):1580-7.
Harianti A. Application of the logistics regression model to predict bankruptcy of delisting companies on the Indonesia sStock exchange for the 2011-2017 period. J Complexity. 2018;5(1):40-57.
Bernardin DEY, Tifani T. Financial distress predicted by cash flow and leverage with capital intensity as moderating. J Appreciation Econ. 2019; 7(1):18-29.
DOI: 10.31846/jae.v7i1.188
Jensen MC, Meckling WH. Theory of the firm: managerial behavior, agency costs, and capital structure. J Financ Econ. 1976;3(4):305-60.
DOI: 10.1016/0304-405X(76)90026-X
Mujiani S, Jum’atul W. Company size as moderating factors affecting financial distress. Acc Fin. 2020;2(2):149-65.
Setiyawan E, Musdholifah. The influence of ownership structure, profitability, liquidity, leverage and exchange rates on financial distress in companies listed on IDX 2016-2017. J Manag Sci (JIM). 2020; 8(1):51-66.
Putri AK, Kristanti FT. Factors affecting financial distress using survival analysis. Sci J Manag Fac Econ. 2020;6(1): 31-42.
Priyatnasari S, Hartono U. Financial ratios, macroeconomics and financial distress: A study on trading, service and investment companies in Indonesia. J Manag Sci. 2019;7:1005-16.
Carolina V. Marpaung EI, Primary DJ, Acc. Financial ratio analysis to predict financial distress conditions (empirical study on manufacturing companies listed on the indonesia stock exchange 2014-2015 period). Maranatha. 2017;9(2):137-45.
Pernamasari R, Purwaningsih S, Tanjung J, Rahayu DP. Good corporate governance and prediction of financial distress to stock prices: atman Z score approach. SSRG-IJEMS. 2019;6(11):56-62.
DOI: 10.14445/23939125/IJEMS-V6I11P107.
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