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Turnaround Prediction Model with Content Dimension on Financial Distressed Firms

Author

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  • Dr. Giriati

    (Management Study Program, Faculty of Economics and Business, Universitas Tanjungpura, 78124, Pontianak, West Kalimantan, Indonesia Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective - This article aims to examine the influence of content dimensions of Organization Change Theory, such as CEO Expertise, Free Assets, Debt to Equity Ratio and Growth of Sales, on a company's turnaround ability when it is experiencing financial distress. The companies examined are listed on the Indonesian Stock Exchange (IDX). Methodology � The population used in this study is companies from sectors excluding the finance sector that were listed on the Indonesian Stock Exchange between 2013 and 2018. The sample size was determined using purposive sampling method. From the 109 companies that experienced financial distress, 57 have successfully turned their business around. The research data was collected from the ICMD (Indonesian Capital Market Directory), which was then analysed using multi regression technique analysis, using SPSS software to examine the determinants of company turnaround ability. Findings � The results indicate that CEO Expertise, Debt to Equity Ratio and Growth of Sales have a negative relationship on a company's turnaround ability. Meanwhile, Free Assets has a positive and significant relationship on a company's turnaround ability. Novelty � Previous studies have been conducted in many western countries, giving rise to researchers' doubts about the generalizability of research based on previous research findings when applied in developing countries such as Indonesia, particularly due to differences in regulations, conditions of distress, culture, financial systems and strategies used in overcoming distress. Type of Paper - Empirical

Suggested Citation

  • Dr. Giriati, 2021. "Turnaround Prediction Model with Content Dimension on Financial Distressed Firms," GATR Journals jfbr182, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jfbr182
    DOI: https://doi.org/10.35609/jfbr.2021.5.4(4)
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial Distress; Turnaround Model; CEO Expertise; Free Assets; Debt to Equity Ratio; Growth of Sales;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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