The effect of financial distress using the Altman and Springate Models on stock return in mediated earnings management:A study on textile and garment companies listed on the Indonesia Stock Exchange 2015-2019 period

Faradisa Bachmid, Sumiati Sumiati and Siti Aisjah
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Faradisa Bachmid: Department of Management, Faculty of Economics and Business,University of Brawijaya Jl. MT. Haryono No.165, Malang, Indonesia
Sumiati Sumiati: Department of Management, Faculty of Economics and Business,University of Brawijaya Jl. MT. Haryono No.165, Malang, Indonesia
Siti Aisjah: Department of Management, Faculty of Economics and Business,University of Brawijaya Jl. MT. Haryono No.165, Malang, Indonesia

International Journal of Research in Business and Social Science (2147-4478), 2021, vol. 10, issue 5, 119-128

Abstract: This study aims to examine and analyze the effect of financial distress with the Altman and Springate Models on stock returns either directly or indirectly by involving earnings management as a mediation. This study uses secondary data from Textile and Garment Companies listed on the Indonesia Stock Exchange from 2015-2019, with a sample of 20 companies using sampling so that 100 observations are obtained. The data is obtained from the annual financial statements. The data analysis technique used SEM-PLS with the help of WarpPLS 6.0 software. The results of the study provide empirical evidence that financial distress has a positive effect on earnings management, while financial distress and earnings management has a negative effect on stock returns. Earnings management is able to mediate the effect of financial distress on stock returns. Key Words:Financial distress, earnings management, stock returns

Date: 2021
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