An Analysis Of Factors Affecting The Financial Distress: The Case Of SOEs In Indonesia
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Abstract
The results of company performance can be determined by one of the internal factors of the company, namely the characteristics possessed by the CEO. Echelon theory explains that vision and strategy choices can be influenced by CEO experience and personality which ultimately affect company performance. The motivation for this study is that in Indonesia it is still rare to use a combination of CEO characteristics variables and financial indicators as factors that can affect financial distress in companies. The aim of this study is to examine the impact of CEO characteristics and financial indicators on financial distress in state-owned companies in Indonesia. This study uses state-owned enterprises (SOEs) listed on the Indonesia Stock Exchange as the research population. The research data was tested using Logistic Regression Analysis. The research findings show that CEO age and sales growth have a significant effect on financial distress. While CEO tenure, CEO educational background, and total liabilities to total assets have no significant effect on financial distress.
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References
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Bouaziz, D., Salhi, B., & Jarboui, A. (2020). CEO Characteristics and Earnings Management: Empirical Evidence from France. Journal of Financial Reporting and Accounting, 18(1), 77–110.
Brigham, & Houston. (2011). Dasar-Dasar Manajemen Keuangan (11th ed.). Salemba Empat.
Certo, S. T., Holmes, R. M., & Holcomb, T. R. (2007). The Influence of People on the Performance of IPO Firms. Business Horizons, 50(4), 271–276.
Chava, S., & Jarrow, R. A. (2004). Bankruptcy Prediction with Industry Effects. Review of Finance, 8, 537–569.
Christidis, A., & Gregory, A. (2010). Some New Models for Financial Distress Prediction in the UK. Centre for Finance and Investement. Discussion Paper, 10/04(September), 1–46.
Çolak, M. S. (2021). A New Multivariate Approach for Assessing Corporate Financial Risk Using Balance Sheets. Borsa Istanbul Review, 21(3), 239–255.
Datta, D. K., & Guthrie, J. P. (1994). Executive Succession: Organizational Antecedents of CEO Characteristics. Strategic Management Journal, 15(7), 569–577.
Elsharkawy, M., Paterson, A. S., & Sherif, M. (2018). Now You See Me: Diversity, CEO Education, and Bank performance in the UK. Investment Management and Financial Innovations, 15(1), 277–291.
Farag, H., & Mallin, C. (2016). The Influence Of CEO Demographic Characteristics On Corporate Risk-Taking: Evidence From Chinese IPOs. The European Journal of Finance,1-31.
Finkelstein, S., & Hambrick, D. C. (1990). Top-Management-Team Tenure and Organizational Outcomes: The Moderating Role of Managerial Discretion. Administrative Science Quarterly, 35(3), 484–503.
Ghozali, I. (2020). 25 Teori Besar Ilmu Manajemen, Akuntansi, dan Bisnis. Yoga Pratama.
Giarto, R. V. D., & Fachrurrozie, F. (2020). The Effect of Leverage, Sales Growth, Cash Flow on Financial Distress with Corporate Governance as a Moderating Variable. Accounting Analysis Journal, 9(1), 15–21.
Gomes, R. C., Alfinito, S., & Albuquerque, P. H. M. (2013). Analyzing Local Government Financial Performance: Evidence from Brazilian Municipalities 2005-2008. Revista de Administração Contemporânea, 17(6), 704–719.
Gottesman, A. A., & Morey, M. R. (2010). CEO Educational Background and Firm Financial Performance. Journal of Applied Finance, 2, 70–82.
Hambrick, D. C., & Mason, P. A. (1984). Upper Echelons: The Organization as a Reflection of Its Top Managers. Academy of Management Review, 9(2), 193–206.
Hanafi, & Halim. (2016). Analisis Laporan Keuangan (5th ed.). UPP STIM YKPN.
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Hoetomo. (2005). Kamus Lengkap Bahasa Indonesia. Mitra Pelajar.
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Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3, 305–360.
Kaur, Rupinder, & Singh, B. (2019). Do CEO characteristics explain
firm performance in India?. Journal Strategy and Management, 12(3), 409-426.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2007). Intermediate Accounting (12th ed.). John Wiley & Sons, Inc.
Koemary, N. P. C. O., Gama, A. S., & Astiti, N. P. Y. (2019). Pengaruh Struktur Corporate Governance dan Financial Indicators terhadap Kondisi Financial Distress Studi Pada Sektor Industri Otomotif dan Komponennya yang Terdaftar Di Bursa Efek Indonesia Periode 2015-2017. Seminar Nasional INOBALI, 840–849.
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Lifia, S., Gurendrawati, E., & Fauzi, A. (2020). Pengaruh Solvabilitas, Pertumbuhan Penjualan, dan Biaya Agensi Manajerial Terhadap Financial Distress: Studi Empiris Pada Perusahaan Sektor Properti Dan Real Estate Yang Terdaftar Di Bursa Efek Indonesia Periode 2016-2018. Jurnal Akuntansi, Perpajakan Dan Auditing, 1(1), 179–194.
Malmendier, U., Tate, G., & Yan, J. (2011). Overconfidence and Early-Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies. The Journal of Finance, LXVI(5), 1687–1733.
Manner, M. H. (2010). The Impact of CEO Characteristics on Corporate Social Performance. Journal of Business Ethics, 93(SUPPL. 1), 53–72.
Maxam, L. C., Nikbakht, E., Petrova, M., & Spieler, C. A. (2006). Manager Characteristics and Hedge Fund Performance. Journal of Applied Finance, 16(2), 57–71.
Megginson, W. L. (1997). Corporate Finance Theory. Addison Wesley.
Naseem, M. A., Lin, J., Rehman, R. ur, Ahmad, M. I., & Ali, R. (2020). Does Capital Structure Mediate the Link Between CEO Characteristics and Firm Performance? Management Decision, 58(1), 164–181.
Platt, H. D., & Platt, M. B. (2002). Predicting Corporate Financial Distress: Reflections on Choice-Based Sample Bias. Journal of Economics and Finance, 26(2), 184–199.
Pratiwi, R., & Aryani, Y. A. (2016). Pengaruh Karakteristik Pemerintah Daerah, Kepala Daerah, Tindak Lanjut Temuan Audit Terhadap Opini. Jurnal Akuntansi, 20(2), 167–189.
Rahayu, W. P., & Sopian, D. (2017). Pengaruh Rasio Keuangan dan Ukuran Perusahaan terhadap Financial Distress. Competitive Jurnal Akuntansi Dan Keuangan, 1(2), 1–13.
Sebaa, A. A., Wallace, J., & Cornelius, N. (2009). Managerial Characteristics, Strategy and Performance in Local Government. Measuring Business Excellence, 13(4), 12–21.
Setiawan, R., & Gestanti, L. (2019). Usia CEO dan Kinerja Perusahaan. Juima, 9(1), 1–5.
Shumway, T. (2001). Forecasting Bankruptcy More Accurately: A Simple Hazard Model. The Journal of Business, 74(1), 101–124.
Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355–374.
Sutra, F. M., & Mais, R. G. (2019). Faktor-Faktor yang Mempengaruhi Financial Distress dengan Pendekatan Altman Z-Score pada Perusahaan Pertambangan yang Terdaftar di Bursa Efek Indonesia Tahun 2015-2017. Jurnal Akuntansi Dan Manajemen, 16(01), 34–72.
Tanjaya, F. L., & Santoso, E. B. (2020). Asosiasi Karakteristik CEO terhadap Potensi Kesulitan Keuangan Perusahaan. Media Akuntansi Dan Perpajakan Indonesia, 1(2), 57–69.
Tinoco, M. H., & Wilson, N. (2013). Financial Distress and Bankruptcy Prediction Among Listed Companies Using Accounting, Market and Macroeconomic Variables. International Review of Financial Analysis, 30, 394–419.
Ufo, A. (2015). Impact of Financial Distress on the Leverage of Selected Manufacturing Firms of Ethiopia. Industrial Engineering Letters, 5(10), 6–11. www.iiste.org
Widhiari, N. L. M. A., & Merkusiwati, N. K. L. A. (2015). Pengaruh Rasio Likuiditas , Leverage, Operating Capacity , dan Sales Growth terhadap Financial. E-Jourrnal Akuntansi Universitas Udayana, 11(2), 456–469.
Wiersema, M. F., & Bantel, K. A. (1992). Top Management Team Demography and Corporate Strategic Change. Academy of Management Journal, 35(1), 91–121.
Zee, A. van der, & Swagerman, D. (2009). Upper Echelon Theory and Ethical Behaviour: an Illustration of the Theory and a Plea for Its Extension Towards Ethical Behaviour. Journal of Business System, Governance and Ethics, 4(2), 27–43.
Altman, E. . (1968). Financial Ratios, Discriminant Analysis and The Prediction of Corporate Bankruptcy. The Journal of Finance, XXIII(4), 589–609.
Atika, Darminto, & Handayani, R. (2013). Pengaruh Beberapa Rasio Keuangan terhadap Prediksi Kondisi Financial Distress. Jurnal Administrasi Bisnis, 1(2), 1–11.
Beber, A., & Fabbri, D. (2012). Who Times the Foreign Exchange Market? Corporate Speculation and CEO Characteristics. Journal of Corporate Finance, 18(5), 1065–1087.
Benjamin, U. D., & Dabor, A. D. (2017). Characteristics and Financial Performance of Nigerian
Banks. IMSU journal of business, 6(3), 123-132.
Boeker, W. (1997). Strategic change: The Influence of Managerial Characteristics and Organizational Growth. Academy of Management Journal, 40(1), 152–170.
Bouaziz, D., Salhi, B., & Jarboui, A. (2020). CEO Characteristics and Earnings Management: Empirical Evidence from France. Journal of Financial Reporting and Accounting, 18(1), 77–110.
Brigham, & Houston. (2011). Dasar-Dasar Manajemen Keuangan (11th ed.). Salemba Empat.
Certo, S. T., Holmes, R. M., & Holcomb, T. R. (2007). The Influence of People on the Performance of IPO Firms. Business Horizons, 50(4), 271–276.
Chava, S., & Jarrow, R. A. (2004). Bankruptcy Prediction with Industry Effects. Review of Finance, 8, 537–569.
Christidis, A., & Gregory, A. (2010). Some New Models for Financial Distress Prediction in the UK. Centre for Finance and Investement. Discussion Paper, 10/04(September), 1–46.
Çolak, M. S. (2021). A New Multivariate Approach for Assessing Corporate Financial Risk Using Balance Sheets. Borsa Istanbul Review, 21(3), 239–255.
Datta, D. K., & Guthrie, J. P. (1994). Executive Succession: Organizational Antecedents of CEO Characteristics. Strategic Management Journal, 15(7), 569–577.
Elsharkawy, M., Paterson, A. S., & Sherif, M. (2018). Now You See Me: Diversity, CEO Education, and Bank performance in the UK. Investment Management and Financial Innovations, 15(1), 277–291.
Farag, H., & Mallin, C. (2016). The Influence Of CEO Demographic Characteristics On Corporate Risk-Taking: Evidence From Chinese IPOs. The European Journal of Finance,1-31.
Finkelstein, S., & Hambrick, D. C. (1990). Top-Management-Team Tenure and Organizational Outcomes: The Moderating Role of Managerial Discretion. Administrative Science Quarterly, 35(3), 484–503.
Ghozali, I. (2020). 25 Teori Besar Ilmu Manajemen, Akuntansi, dan Bisnis. Yoga Pratama.
Giarto, R. V. D., & Fachrurrozie, F. (2020). The Effect of Leverage, Sales Growth, Cash Flow on Financial Distress with Corporate Governance as a Moderating Variable. Accounting Analysis Journal, 9(1), 15–21.
Gomes, R. C., Alfinito, S., & Albuquerque, P. H. M. (2013). Analyzing Local Government Financial Performance: Evidence from Brazilian Municipalities 2005-2008. Revista de Administração Contemporânea, 17(6), 704–719.
Gottesman, A. A., & Morey, M. R. (2010). CEO Educational Background and Firm Financial Performance. Journal of Applied Finance, 2, 70–82.
Hambrick, D. C., & Mason, P. A. (1984). Upper Echelons: The Organization as a Reflection of Its Top Managers. Academy of Management Review, 9(2), 193–206.
Hanafi, & Halim. (2016). Analisis Laporan Keuangan (5th ed.). UPP STIM YKPN.
Hermann, P., & Datta, D. K. (2002). CEO Successor Characteristics and the Choice of Foregein Market Entry Mode: an Empirical Study. Journal of International Business Studies, 33(3), 551–569.
Hoetomo. (2005). Kamus Lengkap Bahasa Indonesia. Mitra Pelajar.
Hosea, I. A., Siswantini, T., & Murtatik, S. (2020). Leverage, Profitabilitas, Pertumbuhan Penjualan terhadap Financial Distress pada Perusahaan Ritel Di BEI. Prosiding Biema (Business Management, Economic, and Accounting National Seminar), 1(1), 60–74.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3, 305–360.
Kaur, Rupinder, & Singh, B. (2019). Do CEO characteristics explain
firm performance in India?. Journal Strategy and Management, 12(3), 409-426.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2007). Intermediate Accounting (12th ed.). John Wiley & Sons, Inc.
Koemary, N. P. C. O., Gama, A. S., & Astiti, N. P. Y. (2019). Pengaruh Struktur Corporate Governance dan Financial Indicators terhadap Kondisi Financial Distress Studi Pada Sektor Industri Otomotif dan Komponennya yang Terdaftar Di Bursa Efek Indonesia Periode 2015-2017. Seminar Nasional INOBALI, 840–849.
Kontan. (2019). KONTAN.pdf. Berita Terkini Investasi Dan Ekonomi Indonesiah.
Lifia, S., Gurendrawati, E., & Fauzi, A. (2020). Pengaruh Solvabilitas, Pertumbuhan Penjualan, dan Biaya Agensi Manajerial Terhadap Financial Distress: Studi Empiris Pada Perusahaan Sektor Properti Dan Real Estate Yang Terdaftar Di Bursa Efek Indonesia Periode 2016-2018. Jurnal Akuntansi, Perpajakan Dan Auditing, 1(1), 179–194.
Malmendier, U., Tate, G., & Yan, J. (2011). Overconfidence and Early-Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies. The Journal of Finance, LXVI(5), 1687–1733.
Manner, M. H. (2010). The Impact of CEO Characteristics on Corporate Social Performance. Journal of Business Ethics, 93(SUPPL. 1), 53–72.
Maxam, L. C., Nikbakht, E., Petrova, M., & Spieler, C. A. (2006). Manager Characteristics and Hedge Fund Performance. Journal of Applied Finance, 16(2), 57–71.
Megginson, W. L. (1997). Corporate Finance Theory. Addison Wesley.
Naseem, M. A., Lin, J., Rehman, R. ur, Ahmad, M. I., & Ali, R. (2020). Does Capital Structure Mediate the Link Between CEO Characteristics and Firm Performance? Management Decision, 58(1), 164–181.
Platt, H. D., & Platt, M. B. (2002). Predicting Corporate Financial Distress: Reflections on Choice-Based Sample Bias. Journal of Economics and Finance, 26(2), 184–199.
Pratiwi, R., & Aryani, Y. A. (2016). Pengaruh Karakteristik Pemerintah Daerah, Kepala Daerah, Tindak Lanjut Temuan Audit Terhadap Opini. Jurnal Akuntansi, 20(2), 167–189.
Rahayu, W. P., & Sopian, D. (2017). Pengaruh Rasio Keuangan dan Ukuran Perusahaan terhadap Financial Distress. Competitive Jurnal Akuntansi Dan Keuangan, 1(2), 1–13.
Sebaa, A. A., Wallace, J., & Cornelius, N. (2009). Managerial Characteristics, Strategy and Performance in Local Government. Measuring Business Excellence, 13(4), 12–21.
Setiawan, R., & Gestanti, L. (2019). Usia CEO dan Kinerja Perusahaan. Juima, 9(1), 1–5.
Shumway, T. (2001). Forecasting Bankruptcy More Accurately: A Simple Hazard Model. The Journal of Business, 74(1), 101–124.
Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355–374.
Sutra, F. M., & Mais, R. G. (2019). Faktor-Faktor yang Mempengaruhi Financial Distress dengan Pendekatan Altman Z-Score pada Perusahaan Pertambangan yang Terdaftar di Bursa Efek Indonesia Tahun 2015-2017. Jurnal Akuntansi Dan Manajemen, 16(01), 34–72.
Tanjaya, F. L., & Santoso, E. B. (2020). Asosiasi Karakteristik CEO terhadap Potensi Kesulitan Keuangan Perusahaan. Media Akuntansi Dan Perpajakan Indonesia, 1(2), 57–69.
Tinoco, M. H., & Wilson, N. (2013). Financial Distress and Bankruptcy Prediction Among Listed Companies Using Accounting, Market and Macroeconomic Variables. International Review of Financial Analysis, 30, 394–419.
Ufo, A. (2015). Impact of Financial Distress on the Leverage of Selected Manufacturing Firms of Ethiopia. Industrial Engineering Letters, 5(10), 6–11. www.iiste.org
Widhiari, N. L. M. A., & Merkusiwati, N. K. L. A. (2015). Pengaruh Rasio Likuiditas , Leverage, Operating Capacity , dan Sales Growth terhadap Financial. E-Jourrnal Akuntansi Universitas Udayana, 11(2), 456–469.
Wiersema, M. F., & Bantel, K. A. (1992). Top Management Team Demography and Corporate Strategic Change. Academy of Management Journal, 35(1), 91–121.
Zee, A. van der, & Swagerman, D. (2009). Upper Echelon Theory and Ethical Behaviour: an Illustration of the Theory and a Plea for Its Extension Towards Ethical Behaviour. Journal of Business System, Governance and Ethics, 4(2), 27–43.
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2023-01-31
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