Research Paper
Year: 2022 | Month: October | Volume: 9 | Issue: 10 | Pages: 131-141
DOI: https://doi.org/10.52403/ijrr.20221015
Effects of Return on Assets, Firm Size, and Institutional Ownership on Financial Distress with Capital Structure as a Moderating Variable (An Empirical Study on the Manufacturing Companies Listed on Indonesia Stock Exchange)
Maharawati Bahri1, Rina Br Bukit2, Keulana Erwin3
1,2,3Department of Accounting, Faculty of Economics and Business Universitas Sumatera Utara, Indonesia
Corresponding Author: Maharawati Bahri
ABSTRACT
This research investigates and tests the effects of Return on Assets, firm size, and institutional ownership on financial distress in the manufacturing companies listed on the Indonesia Stock Exchange and whether the capital structure can moderate the correlation between independent and dependent variables. This causal research uses secondary data, which are analyzed using SPSS. It takes the manufacturing companies listed on Indonesia Stock Exchange from 2016 until 2020 as the population. The purposive sampling technique is employed to select 84 companies and obtain 420 observations by multiplying the sample by five years of research. The findings indicate that partially Return on Assets has positive and significant effects on financial distress, firm size has positive and significant effects on financial distress, and institutional ownership has negative and insignificant effects on financial distress. In addition, the capital structure cannot moderate the effects of Return on Assets, firm size, and institutional ownership on financial distress.
Keywords: return on assets, firm size, institutional ownership, capital structure, financial distress.
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