The Effect of Financial Ratios and Good Corporate Governance on Financial Distress: Independent Commissioners as a Moderating Variable

Mega Permatasari, Nurcahyono Nurcahyono (), Lauda Khansa Bilqis and Wawan Sadtyo Nugroho
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Mega Permatasari: Universitas Muhammadiyah Semarang, Department of Accounting
Nurcahyono Nurcahyono: Universitas Muhammadiyah Semarang, Department of Accounting
Lauda Khansa Bilqis: Universitas Muhammadiyah Magelang, Department of Accounting
Wawan Sadtyo Nugroho: Universitas Muhammadiyah Magelang, Department of Accounting

A chapter in Proceedings of the International Conference on Business, Accounting, Banking, and Economics (ICBABE 2022), 2023, pp 321-336 from Springer

Abstract: Abstract The business world has increasingly fast and competitive business development to compete with each other to maintain or increase the industry’s value. One of the challenges for every industry in competing is always to have ideas that innovate and keep up with the times so that the industry can compete in the sales market to attract consumers. In addition, the industry must also be the capability of expanding its business by having good corporate management in running the business. However, if the sector has lousy control, it will result from the industry’s finances. The result that the sector will receive is experiencing financial difficulties or financial distress. The aim to be achieved from the results of this study is to determine the financial ratios and good corporate governance (audit committee) affect financial distress with the Independent commissioner as a moderating variable. This study uses a quantitative method with a sample of the mining industry in 2018–2021. The analysis used is descriptive statistical analysis and multiple regression analysis. From the results of the tests that have been carried out, it can be concluded that return on assets negatively affects financial distress. Return on equity ratio, current ratio, debt to equity ratio, and audit committee have no results on financial. Net profit margin has a positive effect on financial distress. Debt to asset ratio has no impact on finances. The independent commissioner cannot moderate by weakening the correlation between the net profit margin and financial distress. While the independent commissioner is the capability of moderating by weakening the correlation between the audit committee’s and financial distress.

Keywords: Financial ratio; GCG and Financial Distress (search for similar items in EconPapers)
Date: 2023
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DOI: 10.2991/978-94-6463-154-8_28

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