Integrating Capital Structure, Financial and Non-Financial Performance: Distress Prediction of SMEs

Acc. Fin. Review 4 (2) 56 – 62 (2019)

7 Pages Posted: 10 Sep 2019

Date Written: July 15, 2019

Abstract

Objective - The growth of SMEs in Indonesia is rising from year to year. As an anticipation of bankruptcy, predictions can be made in an integrated means from the perspective of capital structure, financial, and non-financial performance.

Methodology/Technique - A sample of 39 companies were selected using purposive sampling during the research period of 2013-2017. The results of the statistical logistic regression show that profitability is an important factor in predicting financial distress of the SMEs in Indonesia.

Finding - The operating income to total assets has a negative and significant effect on SMEs financial distress. Meanwhile, retained earnings to total assets have a positive impact. Indonesian SMEs must be efficient in their operational costs to avoid financial distress.

Novelty - In addition, sales are also important. If the company's sales are high, and the operational cost efficiency is maintained, the retained earnings will increase. This means that the company will be safe and able to avoid financial distress.

Type of Paper - Empirical.

Keywords: Capital Structure; Financial; Distress; Non-Financial; Performance

JEL Classification: G32, G33, G34

Suggested Citation

Kristanti, Farida Titik and Rahayu, Sri and Isynuwardhana, Deannes, Integrating Capital Structure, Financial and Non-Financial Performance: Distress Prediction of SMEs (July 15, 2019). Acc. Fin. Review 4 (2) 56 – 62 (2019), Available at SSRN: https://ssrn.com/abstract=3438245

Farida Titik Kristanti (Contact Author)

Telkom University ( email )

Jalan Telekomunikasi No.1
Terusan Buah Batu
Bandung, ID West Java 40257
Indonesia

Sri Rahayu

Telkom University

Jalan Telekomunikasi No.1
Terusan Buah Batu
Bandung, ID West Java 40257
Indonesia

Deannes Isynuwardhana

Telkom University ( email )

Jalan Telekomunikasi No.1
Terusan Buah Batu
Bandung, ID West Java 40257
Indonesia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
102
Abstract Views
333
rank
314,936
PlumX Metrics