Turnaround Prediction Model with Content Dimension on Financial Distressed Firms

Reference to this paper should be made as follows: Giriati, S.E, M.E. (2021). Turnaround Prediction Model with Content Dimension on Financial Distressed Firms, Journal of Finance and Banking Review, 5 (4): 36 – 42. https://doi.org/10.35609/jfbr.2021.5.4(4)

7 Pages Posted: 25 Jun 2021

See all articles by GATR Journals Submitter

GATR Journals Submitter

Global Academy of Training and Research (GATR)

Giriati

Tanjungpura University

Date Written: March 31, 2021

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

Keywords: Financial Distress; Turnaround Model; CEO Expertise; Free Assets; Debt to Equity Ratio; Growth of Sales

JEL Classification: B26, G15, P34.

Suggested Citation

Submitter, GATR Journals and Giriati, Turnaround Prediction Model with Content Dimension on Financial Distressed Firms (March 31, 2021). Reference to this paper should be made as follows: Giriati, S.E, M.E. (2021). Turnaround Prediction Model with Content Dimension on Financial Distressed Firms, Journal of Finance and Banking Review, 5 (4): 36 – 42. https://doi.org/10.35609/jfbr.2021.5.4(4), Available at SSRN: https://ssrn.com/abstract=3816366

GATR Journals Submitter (Contact Author)

Global Academy of Training and Research (GATR) ( email )

Suite 15
Taman Bukit Angkasa, Kuala Lumpur 59200
Malaysia

Giriati

Tanjungpura University ( email )

Pontianak
Pontianak, ID Kalimantan Barat
Indonesia

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