Financial Distress Prediction: The Ownership Structure and Management Agency Cost

Maya Indriastuti, Indri Kartika, Naila Najihah

Abstract


This research aimed to predict the financial distress through ownership structure and management agency cost. The ownership structure was tested by managerial ownership and institutional ownership. Meanwhile, the management agency cost was tested by administrative cost ratio. The population of this research were all companies listed in Indonesia Sharia Stock Index year 2016-2018 by using purposive sampling technique. Based on the criteria that have been determined, the total samples were 129 companies. The analysis of the data in this research used logistic regression analysis. The results showed that institutional ownership has a significant negative effect towards the financial distress. Despite, the managerial ownership and management agency cost have a insignificant negative effect toward the financial distress.


Full Text:

PDF

References


Abdullah, S. N. (2006). Board Structure and Ownership in Malaysia: The Case of Distressed listed Companies. Corporate Governance, 6(5), 582–594.

Agus, S. (2011). Manajemen Keuangan Teori dan Aplikasi. Yogyakarta: BPFE.

Al-Khatib, H. B. & A. A.-H. (2012). Predicting Financial Distress of Public Companies Listed in Amman Stock Exchange. European Scientific Journal, 8(15)

Arieany Widya Deviacita. (2012). Analysis of the Effect of Corporate Governance Mechanisms on Financial Distress. Diponegoro Journal of Accounting., 1(1), 13.

Arief Moh. Effendi. (2009). The Power of Good Corporate Governance: Theory and Implementation. Jakarta: Salemba Empat.

Ayuningtias. (2013). Analysis of the Effect of Ownership Structure, Board Composition, and Agency Cost Against Financial Distress. Jurnal Ilmu Manajemen, 1(1).

Azwar, I. (2015). Financial Distress Prediction Model with Binary Logit (Case Study in JII). Jurnal BPPK, 8(1), 21–40.

Bhunia, A. S. I. U. K. & S. M. (2011). Prediction of Financial Distress: A Case Study of Indian Companies. Asian Journal of Business Management, 3(3), 210–218.

Bodroastuti, T. R. I. (2009). Effect of Corporate Governance Structure on Financial Distress. Jurnal STIE Widya Manggala, 1–15.

Brigham, E.F. & Daves, P. R. (2003). Intermediate Financial Management with Thomson One. United States of America: Cengage South-Western.

Classens, Stijn. Simeon Djankov, and L. K. (1999). Resolution of Corporate Distress in East Asia. World Bank Policy Research Working Paper.

Elloumi, F., Gueyié, J.-P., & Gueyie, J. (2001). Financial Distress and Corporate Governance: An Empirical Analysis. Corporate Governance, 15–23.

Emrinaldi Nur, D. . (2007). Analysis of the Effect of Corporate Governance Practices on Corporate Financial distress (Financial Distress: An Empirical Study). Jurnal Bisnis Dan Akuntansi, 9(1), 84 – 108.

Fachrudin Khaira Amalia. (2011). Analysis of the Effect of Capital Structure, Company Size, and Agency Cost on Company Performance. Jurnal Akuntansi Dan Keuangan, 13(1), 37–46.

Ghozali, Imam. (2016). Multivariate Analysis Application with SPSS Programme (V). Semarang: Universitas Diponegoro.

Haddad, A., Jamil, F., & Sufy, A. (2011). The Effect of Corporate Governance on the Performance of Jordanian Industrial Companies: An empirical study on Amman Stock Exchange. International Journal of Humanities and Social Science, 1(4), 55–69.

Hanifah, Oktita Earning & Purwanto, A. (2013). The Effect of Corporate Governance Structure and Financial Indicators on Financial Distress Conditions. Diponegoro Journal of Accounting, 2(2).

Hidayat, M. A., & Meiranto, W. (2014). Financial Distress Prediction of Manufacturing Companies in Indonesia. Diponegoro Journal of Accounting, 3, 1–11.

Indriastuti, Maya & Ifada, L. M. (2011). The Influence of the Quality of the Implementation of Corporate Governance and the Complexity of Banks against Fraud (Case Study at Commercial Banks in 2010). Jurnal Ekonomi & Bisnis, 12(2), 168–178

Indriastuti, Maya. (2012). Analysis of Auditor Quality and Corporate Governance on Earnings Management. Eksistansi, 4(2).

Jensen, Michael and Meckling, W. (1976). Theory of the Firm: Managerial Behavior, Agency Cost, and ownership Structure. Journal O F Financial Economics, 3, 305–360.

Laurenzia, C. & Sufiyati. (2015). Effects of Institutional Ownership, Board of Commissioners Size, Liquidity, Activities and Leverage on Financial Distress of Manufacturing Companies Listed on the Indonesia Stock Exchange. Jurnal Ekonomi, 20(1), 72–88.

Li, H., Wang, Z., & Deng, X. (2008). Ownership, Independent Directors, Agency Costs and Financial Distress: Evidence from Chinese Listed Companies. Corporate Governance, 8(5), 622–636.

Miglani, S., K. Ahmed and Henry, D. (2014). Voluntary Corporate Governance Structures and Financial Distress: Evidence from Australia’. Journal of Contemporary Accounting and Economics, 11(1), 18–30.

Muranda, Z. (2006). Financial Distress and Corporate Governance in Zimbabwean Banks. Managerial Finance, 6(5).

Parulian, S. R. (2007). Relationship of Ownership Structure, Independent Commissioners and Financial Distress Conditions of Public Companies. Jurnal Akuntansi Dan Keuangan, 1(3).

Platt, H., & Platt, M. B. (2002). Predicting Financial Distress. Journal of Financial Service Professionals, 56, 12–15.

Porter E Michel. (1999). Towards a Dynamic Theory of Strategy. Strategic Management Journal, 12, 95–117.

Sutedi Adrian. (2011). Good Corporate Governance. Jakarta: Sinar Grafika.

Triwahyuningtias, M. & Muharam, H. (2012). Analysis of the Effect of Ownership Structure, Board Size, Independent Commissioners, Liquidity, and Leverage on the Occurrence of Financial Distress (Study of Manufacturing Companies Listed on the Indonesia Stock Exchange in 2008-2010). Diponegoro Journal of Management, 1(1), 1–14.

Wruck, K. (1990). Financial Distress, Reorganization, and Organizational Efficiency. Journal of Financial Economics, 27, 419–444

Xiaolan, Deng & Zongjun, W. (2006). Ownership Structure and Financial Distress: Evidence from Public-Listed Companies in China. International Journal of Management.




DOI: http://doi.org/10.33312/ijar.514

Refbacks

  • There are currently no refbacks.


-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Indonesian Journal of Accounting Research (IJAR)

Editorial Secretariat

Master of Science and Doctoral Programs
Faculty of Economics and Business, Gadjah Mada University

Jl. Nusantara, Bulaksumur Yogyakarta 55281
CP : Novita
Phone  : +62 85227764898
Fax    : +62 274 524606
Website: http://ijar-iaikapd.or.id/
Email  : sekretariat@ijar-iaikapd.or.id

Marketing and Sales Office

Ikatan Akuntan Indonesia
Graha Akuntan, Jl. Sindanglaya No.1 Menteng, Jakarta Pusat 10310
CP : Reza Fauzi
Divisi Pelayanan, Keanggotaan dan Mitra IAI.
Grha Akuntan, Jl. Sindanglaya No.1, Menteng.
Telp.021-31904232 Ext.324/321

 

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ISSN 2086-6887 (Print)
ISSN 2655 - 1748 (online)

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

 

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------