What Determine the Financial Distress of Indonesian Companies during the COVID-19 Pandemic?

Fanny Dwi Amalia Putri, Heru Fahlevi


This study is aimed to examine the influence of foreign ownership, CEO profile (tenure, age, and educational background) and leverage on financial distress. Stratified random sampling technique was adopted to select samples of Indonesian multi-sector companies listed on Indonesia Stock Exchange (IDX) in 2020. Data were collected from the companies’ annual reports of 243 sample companies. Using multiple linear regression analysis, this study found that foreign ownership, CEO profile, and leverage have influence on the companies’ financial distress during the pandemic period. Except leverage, all determinants have positive influence of financial distress.

DOI: https://doi.org/10.26905/afr.v6i2.9989


CEO, Educational Background, Financial Distress , Foreign Ownership, and Leverage

Full Text:



Alkurdi, A., & Mardini, G. H. (2020). The Impact of Ownership Structure and The Board of Di-rectors’ Composition on Tax Avoidance Strategies: Empirical Evidence From Jordan. Journal of Financial Reporting and Account-ing, 18(4), 795–812. https://doi.org/10.1108/JFRA-01-2020-0001

Altman, E. I., Iwanicz-Drozdowska, M., Laitinen, E. K., & Suvas, A. (2017). Financial Distress Prediction in an International Context: A Review and Empirical Analysis of Altman’s Z-Score Model. Journal of International Financial Management and Accounting, 28(2), 131–171. https://doi.org/10.1111/jifm.12053

Apriyani, D., & Muhyarsyah. (2021). The Effect of Transfer Pricing, Foreign Ownership on Tax Avoidance with Corporate Social Responsi-bility (SCR) as a Moderated Variables. Inter-national Journal of Business, Economics and Law, 24(2), 29–38.

Annither, Kester Johann, M., Hidayat, A. A., & Farhana, S. (2020). The Impact of Ownership Structure on The Indicator of Financial Dis-tress in Indonesian Companies. Jurnal Akuntansi Dan Bisnis, 20(2), 223–236.

Barno, L. J. (2017, July). Impact of Managers' Char-acteristics on Capital Structures Among Firms Listed in Nairobi Securities Exchange, Kenya. International Journal of Economics, Commerce and Management, 5(7), 487-503.

Bauer, T., Kourouxous, T., & Krenn, P. (2018). Taxation and Agency Conflicts Between Firm Owners and Managers: A Review. Business Research, 11(1), 33–76. https://doi.org/10.1007/s40685-017-0054-y

Chrissentia, T., & Syarief, J. (2018). Analisis Pengaruh Rasio Profitabilitas, Leverage, Likuiditas, Fim Age, dan Kepemilikan Insti-tusional Terhadap Financial Distress (Pada Perusahaan Jasa Non Keuangan Yang Ter-daftar di Bursa Efek Indonesia Tahun 2014-2016). Universitas Katolik Indonesia Atma Jaya, SiMAk Vol.16 No.1. 45-61.

Dewi, W. R., & Damayanti, T. W. (2020). Pengaruh Karakteristik Eksekutif Terhadap Mana-jemen Laba. Jurnal Akuntansi Profesi, 11(2), 316–329. https://doi.org/https://doi.org/10.23887/jap.v11i2.30763

Dirman, A. (2020). Financial Distress: The Impacts of Profitability, Liquidity, Leverage, Firm Size, and Free Cash Flow. International Journal of Business, Economics and Law, 22(1), 17–25.

García, C. J., & Herrero, B. (2021). Female Directors, Capital Structure, and Financial Distress. Journal of Business Research. 592–601. https://doi.org/10.1016/j.jbusres.2021.07.061

Gustafsson, P. & Uysal, E. (2018). CEO? Or More Like Risk EO? A Cross- Sectional Study of CEO Characteristics and Firm Risk Taking. UMEA School of Business, Economics and Statistics, UMEA University.

Hermann, P., & Deepak, K.D. (2006). CEO Experi-ences: Effects on The Choice of FDI Entry Mode. Journal of management Studies. 43 (4), 755-778.

IDX Data Services Division. (2020). IDX Yearly Statistics 2020. IDX Statistics 2020. http://www.idx.co.id/media/8473/idx_annually

Jayawardhana D. R. (2018) The Financial Distress Prediction and Factor Affecting Toward Coal Mining Company (Empirical Study at Coal Mining Company Listed on the Indonesia Stock Exchange Year 2014-2017). Jurnal Imiah Mahasiswa FEB (JIMFEB). 7 (2).

Jodjana, J. J., Nathaniel, S., Rinaningsih, R., & Pranoto, T. (2021). The Effect of Board and Ownership Structure on the Possibility of Financial Distress. Journal of Accounting and Investment, 22(3), 581–601. https://doi.org/10.18196/jai.v22i3.12659

Kartika et al (2018). Impact of Financial Ratio on Financial Distress in Indonesian Manufacturing Companies. International Journal of Research Science & Management, 93-100. https://doi.org/10.5281/zenodo.1462026

Kazemian, S., Shauri, N., Sanusi, Z. M., Kama-luddin, A., & Shuidan, S. M. (2017). Monitor-ing Mechanisms and Financial Distress of Public Listed Companies in Malaysia. Jour-nal of International Studies 10 (1), 92-109.

Khorraz, G. J., & Dewayanto, T. (2020). Pengaruh Struktur Kepemilikan, Diversitas Gender Dewan Komisaris, dan Value Creation Ter-hadap Financial Distress. Diponegoro Jour-nal of Accounting 9 (4), 1-14.

McClelland, P.L., Barker III, V.L., & Oh, W. (2010). CEO Career Horizon and Tenure: Future Performance Implications Under Different Contingencies. Journal of Business Research, 65 (9), 1387-1393.

Mittal, S., & Lavina. (2018). Females’ Representa-tion in The Boardroom and Their Impact on Financial Distress: An Evidence from Family Businesses in India. Indian Journal of Corporate Governance, 11(1), 35–44. https://doi.org/10.1177/0974686218763857

Munene, H. nguta, & Ndegwa, J. (2021). The Medi-ating Effect of Firm Revenue on The Rela-tionship Between Board Characteristics on Financial Distress of Deposit Taking Saccos in Nairobi County, Kenya. International Journal of Finance & Banking Studies (2147-4486). 10(1), 34–47. https://doi.org/10.20525/ijfbs.v10i1.1080

Nathania, C., Wijaya, S., & Hutagalung, G. (2021). The Influence of Company Size And Lever-age on Tax Avoidance with Profitability as Intervening Variable at Mining Company Listed in Indonesia Stock Exchange Period 2016-2018. International Journal of Business, Economics and Law, 24(2), 132–140.

Nurwaspodo, A. (2016). Pengaruh Struktur Kepemilikan Perusahaan Terhadap Finan-cial Distress Dengan Leverage Sebagai Variabel Kontrol. Thesis Diponegoro University.

Pardede, P. G., & Syafruddin, M. (2022). Pengaruh Struktur Kepemilikan Terhadap Kemung-kinan Terjadinya Financial Distress. Dipone-goro Journal Of Accounting 11 (2), 1-14.

Peni, Emilia. 2014. CEO and Chairperson Charac-teristics and Firm Performance. Journal of Management & Governance. 18, 185–205.

Pujakusum, D. P., & Sinarti, S. (2019). The Effect of Good Corporate Governance Mechanism On The Financial Performance of Banking Com-panies Listed In Stock Exchange Indonesia 2012-2016. Journal of Applied Managerial Accounting, 3(2), 273–287. https://doi.org/10.30871/jama.v3i2.1552

Puspitaningrum, T., & Kartika, D. (2018). Impact of Financial Ratio on Financial Distress in Indonesia Manufacturing Companies. International Journal of Research & Management, 5(9), 93–100. https://doi.org/10.5281/zenodo.1462026

Putri, E. L., Haryanto, S., & Firdaus, R. M. (2018). Mampukah Good Corporate Governance dan Risiko Kredit Sebagai Prediktor Financial Distress? AFRE (Accounting and Financial Review), 1(1), 26–35. https://doi.org/10.26905/afr.v1i1.229

Rahmah, I., & Novianty, I. (2021). Comparative Analysis of Financial Distress Before and During the Covid-19 Pandemic: Empirical Evidence in Indonesia. International Journal of Business, Economics and Law, Vol. 24, 5

Sabli, N., Zulfikri, M., Rashid, A., Hamizi, A., & Hashim, B. (2016). The Impact of Educational Level of Board of Directors on Firms’ Performance. Regional Conference on Science, Technology and Social Sciences. https://doi.org/10.1007/978-981-10-1458-1

Safitri, M. G., & Yuliana, I. (2021). The Effect of Profitability and Leverage on Financial Dis-tress with Inflation as Moderating. Jurnal ASET (Akuntansi Riset), 13(1), 134–143.

Salloum, C. &. (2012). Corporate Governance and Firms in Financial Distress: Evidence From A Middle Eastern Country. International Journal of Business Governance and Ethics, 7(1), 1-17.

Santoso, R. D., & Rakhman, F. (2013). CEO Charac-teristics and Earnings Management. The In-donesian Journal of Accounting Research, 16 (03), 181-196.

Santoso, L., & Nugrahanti, Y. W. (2022). The Effect of Ownership Structure on Financial Dis-tress: Evidence in Indonesian Manufac-turing Companies. Jurnal Riset Akuntansi Kontemporer, 14(2022), 55–64. https://doi.org/10.21744/irjmis.v7n1.830

Saputri, M. S. (2021). Pengaruh Jenis Kelamin, Usia dan Tenure CEO (Chief Executive Officers) terhadap Praktik Manajemen Laba. AKUNESA: Jurnal Akuntansi Unesa 10 (1), 1-10.

Sari, N. L. K. M., & Putri, I. G. A. M. A. D. (2016). Kemampuan Profitabilitas Memoderasi Pengaruh Likuiditas dan Leverage terhadap Financial Distress. Juara Jurnal Riset Akutansi, 6(1), 3419–3448. https://jurnal.unmas.ac.id/index.php/JUARA/article/view/558

Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill-Building Approach. 7th Edition, Wiley & Sons, West Sussex.

Sekarningrum, S. N. (2020). Pengaruh Rasio Keu-angan, Arus Kas Operasi, dan Struktur Kepemiliki Terhadap Kondisi Financial Dis-tress (Studi Pada Perusahaan Sub Sektor Perdagangan Eceran yang Terdaftar di BEI Periode 2015-2019. Penelitian Studi Akuntansi pada Fakultas Ekonomi UII.

Septiani, T. A., Siswantini, T., & Murtatik, S. (2021). Pengaruh Likuiditas, Leverage Dan Profitabilitas Terhadap Financial Distress Pada Sektor Industri Barang Konsumsi Yang Terdaftar Di Bei. Jurnal Apresiasi Ekonomi, 9(1), 100–111. https://doi.org/10.31846/jae.v9i1.335

Silvina, S., Robin, R. and Yuwono, W. (2022) “The impact on firm performance: Evidence from CEO education,” INOVASI, 18(1), pp. 176–184. Available at: https://doi.org/10.30872/jinv.v18i1.10477.

Supriyanto, J. ko, & Darmawan, A. (2018). The Effect of Financial Ratio on Financial Distress in Predicting Bankruptcy. Journal of Applied Managerial Accounting, 2(1), 110–120. https://doi.org/10.30871/jama.v2i1.727

Suryadi, A., & Serly, V. (2022). Pengaruh Struktur Kepemilikan terhadap Financial Distress: Studi Empiris Pada Perusahaan BUMN di Indonesia Tahun 2015-2019. urnal Eksplorasi Akuntansi (JEA) 4 (2), 349-362.

Susanti, N., Latifa, I., & Sunarsi, D. (2020). The Effects of Profitability, Leverage, and Li-quidity on Financial Distress on Retail Companies Listed on Indonesian Stock Ex-change. Jurnal Ilmiah Ilmu Administrasi Publik, 10(1), 45. https://doi.org/10.26858/jiap.v10i1.13568

Tanjaya, F. L., & Santoso, E. B. (2020). Asosiasi Karakteristik CEO Terhadap Potensi Kesu-litan Keuangan Perusahaan . Media Akuntansi dan Perpajakan Indonesia 1 (2), 153-169.

Thim, C. K., Choong, Y. V., & Nee, C. S. (2011). Factors Affecting Financial Distress: The Case of Malaysian Public Listed Firms. Corporate Ownership and Control, 8(4 D), 345–351. https://doi.org/10.22495/cocv8i4c3art3

Ting, Irene & Azizan, Noor & Kweh, Qian Long. (2015). Upper Echelon Theory Revisited: The Relationship between CEO Personal Charac-teristics and Financial Leverage Decision. Procedia - Social and Behavioral Sciences. 195. 686-694. 10.1016/j.sbspro.2015.06.276.

Udin, S., Khan, M. A., & Javid, A. Y. (2017). The Effects of Ownership Structure on likeli-hood of Financial Distress: An Empirical Evidence. Corporate Governance: Interna-tional Journal of Business Society, 14(4), 589–612. https://doi.org/10.1108/CG-03-2016-0067

Villalba-Ríos, P., Barroso-Castro, C., & Vecino-Gravel, J. D. (2021). The Influence of CEO Profile on Corporate Social Responsibility Companies. A Qualitative Comparative Analysis. Corporate Social Responsibility and Environmental Management, 1–11. https://doi.org/10.1002/csr.2205

WHO (2020). WHO Director-General’s Opening Remarks at The Media Briefing on COVID-19. https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020

Williansyah, F., & Meiliana. (2022). Kesulitan Keu-angan: Efek Struktur Kepemilikan, Karakteristik Dewan Direksi, dan Indeks Tata Kelola Perusahaan. Global Financial Accounting Journal, Vol. 06, No. 02, 306.

Yanwardhana, E. (2021). “Berdarah-darah”, Rama-yana Tutup 19 Gerai per Semester I-2021. CNBC Indonesia. https://www.cnbcindonesia.com/market/20210910180002-17-275398/berdarah-darah-ramayana-tutup-19-gerai-per-semester-i-2021

Yahaya & Awen (2021). Chief Executive Officers and Bankruptcy Risk: Evidence from Quoted Resources Firms in Nigeria. Journal of Man-agement and Social Science. 1000-1009. https://www.researchgate.net/publication/352837130

Yao, S. (2021). “Who Should Be the Next CEO?” Desirable Successor Characteristics in Recovery from Financial Distress. Emerging Markets Finance and Trade, 57(15), 4461–4472. https://doi.org/10.1080/1540496X.2020.1828857

Yoo, T., & Koh, Y. (2014). Agent or Structure for Principal-Principal Conflicts? Audit Firms Versus Foreign Ownership in The Asian Context. Asian Business and Management, 13(4), 309–332. https://doi.org/10.1057/abm.2014.11

Young, M. N., Peng, M. W., Ahlstrom, D., Bruton, G. D., & Jiang, Y. (2008). Corporate Govern-ance in Emerging Economies: A Review of The Principal-Principal Perspective: Review Paper. Journal of Management Studies, 45(1), 196–220. https://doi.org/10.1111/j.1467-6486.2007.00752.x

Zahra, K., Khan, M. J., & Warraich, M. A. (2018). CEO Characteristics and The Probability of Financial Distress: Evidence from Pakistan. NUML Internation Journal of Business & Management, 13, 1–11. https://doi.org/10.1002/%0Acsr.2205

Zeytinoglu, E. (2013). Financial Failure Prediction Using Financial Ratios: An Empirical Ap-plication on the Saudi Stock Exchange. Re-search Journal of Finance and Accounting, January 2013, 106–116. https://doi.org/10.7176/rjfa/10-9-07

DOI: https://doi.org/10.26905/afr.v6i2.9989


  • There are currently no refbacks.

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

AFRE (Accounting and Financial Review)

Postgraduate - University of Merdeka Malang

Postgraduate  Building, Terusan Dieng Street 62-64
Malang City, East Java, Indonesia, 65146.

View My Stats      Web

Other Link

Follow Us

Site Home Journal
Unmer Malang
(0341) 567617
 Fax(0341) 567617

AFRE (Accounting and Financial Review)  Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.