Research Article
The Influence of Institutional Ownership, Leverage, Liquidity, and Firm Size on Company’s Financial Distress
@INPROCEEDINGS{10.4108/eai.9-8-2022.2338631, author={Dwi Yuliandriani and Heri Yanto and Niswah Baroroh and Ain Hajawiyah}, title={The Influence of Institutional Ownership, Leverage, Liquidity, and Firm Size on Company’s Financial Distress}, proceedings={Proceedings of the 5th International Conference on Economics, Business and Economic Education Science, ICE-BEES 2022, 9-10 August 2022, Semarang, Indonesia}, publisher={EAI}, proceedings_a={ICE-BEES}, year={2023}, month={11}, keywords={financial distress leverage institutional ownership liquidity company size transportation companies}, doi={10.4108/eai.9-8-2022.2338631} }- Dwi Yuliandriani
Heri Yanto
Niswah Baroroh
Ain Hajawiyah
Year: 2023
The Influence of Institutional Ownership, Leverage, Liquidity, and Firm Size on Company’s Financial Distress
ICE-BEES
EAI
DOI: 10.4108/eai.9-8-2022.2338631
Abstract
This study analyzes the effect of institutional ownership, leverage, liquidity, and firm size on financial distress. Financial distress is a condition where the company experiences financial difficulties. Prominent characteristics of a company experiencing financial distress are the continuous decline in company profits over the last few years and the company's inability to fulfill its obligations when they fall due. Many companies have been experiencing financial difficulties recently due to the COVID-19 pandemic. This study uses quantitative methods to examine the effect of independent variables on the financial distress of transportation sub-sector companies. The population of this study is all transportation sub-sector companies listed on the Indonesia Stock Exchange (IDX), reaching 46 companies. The study employed a purposive sampling technique which resulted in 93 units of analysis. By using multiple regression analysis, the study found that leverage and firm size positively affected financial distress. Meanwhile, liquidity has a negative effect on financial distress, and institutional ownership does not affect financial distress. Companies should identify accurate strategies to reduce financial distress by gaining more cash inflow, improving institutional ownership, and so forth. Government should provide facilitation to companies experiencing financial distress by providing financial and non-financial assistance.