Apakah CG Disclosure dan ROE Mempengaruhi Financial Distress?

Hafizhah Risnafitri, Abrar Amri, Rahmat Hidayat, Albet Albet, Dara Angreka Soufyan

Abstract


Financial Distress (FD) is a critical stage requiring an accurate early warning system. Previous studies identify profitability (Return on Equity - ROE) and Corporate Governance (CG) as key determinants. However, gaps exist regarding CG's weakening effectiveness under pressure and the challenging interpretation of high profitability in the Indonesian context. This study aims to examine the effect of the Corporate Governance Disclosure Index (CGDI) and ROE on FD probability. The methodology employs Logistic Regression on 256 companies from the Cyclical Industry (2023–2024). Variables and measures utilized include: FD as the binary dependent variable (Springate S-Score), CGDI and ROE as an independent.  The model was found to be simultaneously significant in predicting FD, yet the Hosmer and Lemeshow Test indicated the model is not fully fitted. Individually, CGDI has no significant effect on FD. This finding supports the view that formal CG mechanisms lose monitoring effectiveness under financial pressure (distress), often acting as mere formal legitimacy (Legitimacy Theory). Conversely, ROE has a significant and positive effect on FD probability. This counter-intuitive finding is interpreted as illusory profitability or earnings management due to strong managerial incentives (Agency Theory). High ROE becomes a misleading signal, reinforcing that profitability interpretation is a major issue within the Indonesian distress context. Consequently, the findings highlight the imperative for market participants to shift analytical focus toward underlying cash flow and liquidity indicators, while demonstrating the need for internal CG mechanisms beyond mere disclosure to effectively mitigate financial distress risk in the Indonesian market environment.

Keywords


Financial Distress, CGDI, ROE, Logistic Regression, Cyclical Industry

Full Text:

PDF

References


Abrori, S. R., Hendrawaty, E., & Hasnawati, S. (2023). Corporate Governance and Financial Distress: A Comprehensive Analysis of Indonesian Manufacturing Companies. Asian Journal of Economics, Business and Accounting, 23(24), 268–278. https://doi.org/10.9734/ajeba/2023/v23i241203

Aditya Yunanto, & Atri Nodi Maiza Putra. (2025). Pengaruh Profitabilitas (ROA), (ROE), dan Leverage (DER) terhadap Harga Saham Perusahaan Pertambangan yang Terdaftar di BEI 2019-2023. Jurnal Mutiara Ilmu Akuntansi, 3(2), 60–72. https://doi.org/10.55606/jumia.v3i2.3745

Alexandra, C., Lionardi, M., William, W., Jennefer, S., & Meiden, C. M. (2022). Studi Literatur: Pengaruh Faktor Good Corporate Governance terhadap Financial Distress. Owner, 6(1), 111–122. https://doi.org/10.33395/owner.v6i1.536

Altman, E. I. (1968). FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCY. The Journal of Finance, 23(4), 589–609. https://doi.org/10.1111/j.1540-6261.1968.tb00843.x

Andriani, S. D., Kusumastuti, R., & Hernando, R. (2022). Pengaruh Return On Equity (ROE), Earning Per Share (EPS) dan Debt To Equity Ratio (DER) Terhadap Harga Saham (Studi Empiris Pada Perusahaan Industri Makanan Olahan yang Terdaftar di Bursa Efek Indonesia Tahun 2018 – 2020). Owner, 7(1), 333–345. https://doi.org/10.33395/owner.v7i1.1268

Ariowibowo, T. S., & Brahmayanti, I. A. (2022). Detection Of Financial Distress As An Effort Early Warning System For Coal Mining Companies Listed On The Indonesia Stock Exchange Period 2019 – 2021. JEA17: Jurnal Ekonomi Akuntansi, 7(2), 88–108. https://doi.org/10.30996/jea17.v7i2.7525

Balasubramanian, S. A., Radhakrishna, G. S., Sridevi, P., & Natarajan, T. (2019). Modeling corporate financial distress using financial and non-financial variables: The case of Indian listed companies. International Journal of Law and Management, 61(3–4), 457–484. https://doi.org/10.1108/IJLMA-04-2018-0078

Beltman, J., Machado, M. R., & Osterrieder, J. R. (2025). Predicting retail customers’ distress in the finance industry: An early warning system approach. Journal of Retailing and Consumer Services, 82, 104101. https://doi.org/10.1016/j.jretconser.2024.104101

Binesh, F. (Nasim), E-Vahdati, S., & Ozdemir, O. (2024). ESG performance and financial distress during COVID-19: the moderating effects of innovation and capital intensity. Asia-Pacific Journal of Business Administration. https://doi.org/10.1108/APJBA-12-2022-0515

Brealey, R. A. ., Myers, S. C. ., Allen, Franklin., & Edmans, Alex. (2025). Principles of Corporate Finance. McGraw Hill. https://www.mheducation.com/content/dam/mhe/blog/higher-ed/2025/pdfs/brealey-principles-of-corporate-finance-evergreen-2025.pdf

Che, W., Wang, Z., Jiang, C., & Abedin, M. Z. (2024). Predicting financial distress using multimodal data: An attentive and regularized deep learning method. Information Processing and Management, 61(4). https://doi.org/10.1016/j.ipm.2024.103703

Dwi Kurniawati, D., Rokhmat Wijaya, N., & Ratnawati, T. (1945). Meta Analysis the Effect of Financial Distress on Good Corporate Governance Practices.

Ginanti, & Soufyan, D. A. (2024a). Rasio Keuangan dan Financial Distress pada Perusahaan Agrikultur yang Terdaftar di Bursa Efek Indonesia. 14(1). www.bisnis.com

Ginanti, & Soufyan, D. A. (2024b). Rasio Keuangan Dan Financial Distress Pada Perusahaan Agrikultur Yang Terdaftar Di Bursa Efek Indonesia. JURNAL AKUNTANSI MUHAMMADIYAH, 14(1), 158–173. https://doi.org/https://doi.org/10.37598/jam.v1i1.2120

Gordon L. V. Springate. (1978). Predicting_the_Possibility_of_Failure_in. Simon Fraser University.

Hansen, P. P., & Andersen, T. K. (2023). The Power of Buybacks: Examining Actual Share Repurchases in Scandinavia.

Haris, & Sandra, A. (2023). Determinants of company bankruptcy before and during the Covid 19 Pandemic. Jurnal Ekonomi Perusahaan, 30(1), 1–14. https://doi.org/10.46806/jep.v30i1.922

Hutauruk, M. R., Mansyur, M., Rinaldi, M., & Situru, Y. R. (2021). Financial Distress Pada Perusahaan Yang Terdaftar Di Bursa Efek Indonesia. JPS (Jurnal Perbankan Syariah), 2(2), 237–246. https://doi.org/10.46367/jps.v2i2.381

Islam, M. N., Li, S., & Wheatley, C. M. (2023). Accounting comparability and financial distress. Review of Accounting and Finance, 22(3), 353–373. https://doi.org/10.1108/RAF-07-2022-0207

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X

Junaidi, M., & Rahayu, R. D. (2020). Prediksi Financial Distress Menggunakan Model Neuro Fuzzy dan Rasio Altman. 6(6), 95–109.

Kazemian, S., Shauri, N., Sanusi, Z. M., Kamaluddin, A., & Shuhidan, S. M. (2017). Monitoring mechanisms and financial distress of public listed companies in Malaysia. Journal of International Studies, 10(1), 92–109. https://doi.org/10.14254/2071

Landelius, B., Lindqvist, K., & Papadopoulos, S. (2023). The Impact of Share Repurchases on Stock Liquidity During Market Distress.

Lestari, S. A., & Armayah, M. (2016). Profitability and Company Value: Empirical Study of Manufacture Companies in Indonesia Period 2009 - 2014. Information Management and Business Review, 8(3), 6–10. https://doi.org/10.22610/imbr.v8i3.1326

Machmuddah, Z., Sumaryati, A., & Komara, A. (2024). Company Size, Profitability, Leverage, and Corporate Social Responsibility Disclosure Bank in Indonesia. Jurnal Kajian Akuntansi, 8(1), 76–93. https://doi.org/10.33603/jka.v8i1.9418

Market, J., Author, S., & Spence, M. (1973). Job Market Signaling. In Source: The Quarterly Journal of Economics (Vol. 87, Issue 3).

Martini, R., Raihana Aksara, R., Rachma Sari, K., Zulkifli, Z., & Hartati, S. (2023). Comparison of Financial Distress Predictions With Altman, Springate, Zmijewski, and Grover Models. Golden Ratio of Finance Management, 3(1), 11–21. https://doi.org/10.52970/grfm.v3i1.216

Mittal Shrivastav, S., & Kalsie, A. (2017). Corporate Governance Disclosure Index And Firm Performance: Evidence From NSE Companies. Business Analyst, 38, 155–2.

Morris, R. D. (1987). Signalling, Agency Theory and Accounting Policy Choice. Accounting and Business Research, 18(69), 47–56. https://doi.org/10.1080/00014788.1987.9729347

Neiska Oliviana, & Maria Yovita R. Pandin. (2023). Analisis Financial Distress Dengan Menggunakan Metode Altmn Z-Score Dan Springate S-Score Pada Perusahaan Sub Sektor Industri Makanan Dan Minuman Yang Terdaftar Di Bursa Efek Indonesia Tahun 2017 – 2021. Journal of Student Research, 1(2), 334–346. https://doi.org/10.55606/jsr.v1i2.1005

Ninda Febriyanti, F., & Khalifaturofi’ah, S. O. (2023). Good Corporate Governance Dan Financial Distress Pada Perusahaan Manufaktur Di Indonesia. Jurnal Ekonomi, 28(2), 274–291. https://doi.org/10.24912/je.v28i2.1625

Nugroho, D. S., & Dewayanto, T. (2025). Application of statistics and artificial intelligence for corporate financial distress prediction models: a systematic literature review. In Journal of Modelling in Management. Emerald Publishing. https://doi.org/10.1108/JM2-12-2024-0412

Palepu, K. G. . (2010). Business analysis and valuation : using financial statements. Cengage Learning Australia.

Prasetyo, A., & Faturohma, T. (2023). Financial Distress And Financial Performance Analysis Of Highway Companies Before And During The Covid19 Pandemic: Evidence From Indonesia Stock Exchange. In International Symposia in Economic Theory and Econometrics (Vol. 31, pp. 151–165). Emerald Publishing. https://doi.org/10.1108/S1571-038620230000031021

Rizky Nurmala Awaliyah, & Syahzuni, B. A. (2025). Pengaruh Likuiditas, Profitabilitas dan Leverage Terhadap Financial Distress. Jurnal Ekonomi, Manajemen, Bisnis Dan Akuntansi Review, 5(1), 15. https://doi.org/10.53697/emba.v5i1.2442

Saidah, H., & Sulistiyo, H. (2024). Analisis Pengaruh Rasio Keuangan Terhadap Financial Distress Pada Perusahaan Transportasi Yang Terdaftar di BEI Periode 2020-2023. Bilancia : Jurnal Ilmiah Akuntansi, 8(4), 370. https://doi.org/10.35145/bilancia.v8i4.4734

Scott, W. R. . (2015). Financial accounting theory. Pearson.

Shahid, Z. A., Tariq, M. I., Paul, J., Naqvi, S. A., & Hallo, L. (2024). Signaling theory and its relevance in international marketing: a systematic review and future research agenda. International Marketing Review, 41(2), 514–561. https://doi.org/10.1108/IMR-04-2022-0092

Sitorus, F. D., Hernandy, F., Triskietanto, W., Angela, A., & Vanessa, V. (2022). Pengaruh Likuiditas, Leverage, Profitabilitas dan Ukuran Perusahaan terhadap Financial Distress pada Perusahaan Barang Konsumsi yang Terdaftar di BEI Tahun 2016-2020. Owner, 6(1), 85–98. https://doi.org/10.33395/owner.v6i1.530

Song, Y., Li, R., Zhang, Z., & Sahut, J.-M. (2024). ESG performance and financial distress prediction of energy enterprises. Finance Research Letters, 65, 105546. https://doi.org/10.1016/j.frl.2024.105546

Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. The Academy of Management Review, 20(3), 571. https://doi.org/10.2307/258788

Sudaryanti, D., & Dinar, A. (2019). Analisis Prediksi Kondisi Financial Distress Menggunakan Rasio Likuiditas, Profitabilitas, Financial Leverage Dan Arus Kas. Jurnal Ilmiah Bisnis Dan Ekonomi Asia, 13(2), 101–110. https://doi.org/10.32812/jibeka.v13i2.120

Tanaka, K., Higashide, T., Kinkyo, T., & Hamori, S. (2025). A Multi-Stage Financial Distress Early Warning System: Analyzing Corporate Insolvency with Random Forest. Journal of Risk and Financial Management, 18(4), 195. https://doi.org/10.3390/jrfm18040195

Truong, K. D. (2022). Corporate governance and financial distress: An endogenous switching regression model approach in vietnam. Cogent Economics & Finance, 10(1), 2111812. https://doi.org/10.1080/23322039.2022.2111812

Truong, Q.-T., Tran, Q.-N., Srivuttichan, T., & Chen, R. (2025). The significance of ESG performance for financial distress: new evidence. Applied Economics Letters, 1–7. https://doi.org/10.1080/13504851.2025.2471553

Wagner, S. M., Bode, C., & Peter, M. A. (2022). Financially distressed suppliers: exit, neglect, voice or loyalty? International Journal of Logistics Management, 33(4), 1500–1523. https://doi.org/10.1108/IJLM-02-2021-0127

Wasril, S., & Puspitasari, W. (2024). Pengaruh Pengungkapan Manajemen Risiko, Koneksi Politik, Kompensasi Bonus Dan Ukuran Perusahaan Terhadap Manajemen Laba. EKOMA : Jurnal Ekonomi, Manajemen, Akuntansi, 3(6), 1645–1162.

Younas, N., UdDin, S., Awan, T., & Khan, M. Y. (2021). Corporate governance and financial distress: Asian emerging market perspective. Corporate Governance (Bingley), 21(4), 702–715. https://doi.org/10.1108/CG-04-2020-0119


Refbacks

  • There are currently no refbacks.