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The Impact of Earning Management, Business Strategy, and Firm Life Cycle on Financial Distress, with State Owned Enterprises as a Moderating Variable of Listed Company in Indonesia Stock Exchange 2019–2022

In: Proceedings of the International Conference on Economics, Management, and Accounting (ICEMAC 2022)

Author

Listed:
  • Fanny Anggraini

    (University of Indonesia)

  • Nur Dhani Hendranastiti

    (University of Indonesia)

Abstract

Company’s management conduct the bankruptcy analysis to mitigate financial distress in the hope of making the right business strategy, in particular of stages in the firm’s life cycle, to reduce the possibility of earning management that has close association with financial distress. This study examines the effect of earnings management, business strategy, and firm’s life cycle on financial distress by using state-owned enterprises as a moderating variable. The study used a sample of 294 listed companies on the Indonesia Stock Exchange with a total of 3,528 observations. The selected research model was the fixed effect model, which the results showed that earnings management, cost leadership & differentiation business strategy, and the firm’s life cycle with a proxy for retained earnings to total assets have an effect on the possibility of financial distress, but for the firm life with a proxy for retained earnings to total equity, found that no impact on financial distress. The moderating variable of state owned enterprises in companies can strengthen or weaken each independent variable’s relationship to financial distress.

Suggested Citation

  • Fanny Anggraini & Nur Dhani Hendranastiti, 2023. "The Impact of Earning Management, Business Strategy, and Firm Life Cycle on Financial Distress, with State Owned Enterprises as a Moderating Variable of Listed Company in Indonesia Stock Exchange 2019–2022," Advances in Economics, Business and Management Research, in: Prasetyo Hartanto (ed.), Proceedings of the International Conference on Economics, Management, and Accounting (ICEMAC 2022), pages 402-415, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-226-2_33
    DOI: 10.2991/978-94-6463-226-2_33
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