The Effect of Board Size, Institutional Ownership and Insolvency Risk on Financial Distress Before and During Covid-19

Natalia, Ivena and Rudiawarni, Felizia Arni (2022) The Effect of Board Size, Institutional Ownership and Insolvency Risk on Financial Distress Before and During Covid-19. Jurnal Dinamika Akuntansi, 14 (2). pp. 13-29. ISSN 2085-4277

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Abstract

and the COVID-19 pandemic on financial distress. This study differs from previous studies because it analyzes financial distress in COVID-19. This study also analyzes the impact of COVID-19 on financial distress for each sector on the Indonesia Stock Exchange. Method: This research applies logistic regression analysis. This study uses data from the financial and annual reports of companies listed on the Indonesia Stock Exchange, which are non-financial sectors from 2018 to 2020. This research covers 1,310 firm years as the object of study. Findings: This study finds that board size and institutional ownership can reduce financial distress risk by carrying out a monitoring function. Higher levels of debt increase the company’s insolvency risk, resulting in a higher probability of the company experiencing financial distress. In addition, insolvency risk and the COVID-19 pandemic also influence financial distress, especially for property, real estate, construction building and trade, services, and investment sectors. Novelty: This research enriched the literature by finding out about the impact of the COVID-19 pandemic on financial distress. This research provides new insight regarding the influence of board size, institutional ownership, and insolvency risk on the probability of financial distress by considering the COVID-19 pandemic – the recent conditions when this research was conducted. This study also complements a sector-by-sector analysis that has not been done in previous studies on financial distress during the crisis.

Item Type:	Article
Uncontrolled Keywords:	Board Size, Financial Distress; Institutional Ownership; Insolvency Risk; COVID-19
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HF Commerce H Social Sciences > HF Commerce > HF5601 Accounting
Divisions:	Faculty of Business and Economic > Department of Accounting
Depositing User:	Felizia Arni Rudiawarni 31129
Date Deposited:	25 Nov 2022 13:40
Last Modified:	28 Nov 2022 03:07
URI:	http://repository.ubaya.ac.id/id/eprint/42892

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