Analyzing the Impact of Financial Ratios and Good Corporate Gover-nance on Financial Distress Prediction Models

Ramadhan  Wahyu Sukamto; Yuniatin Trisnawati D.K.W

doi:10.69725/aai.v2i1.375

Authors

Ramadhan Wahyu Sukamto Department of Accounting, Faculty of Business and Economy, Dharma AUB University, Surakarta, Indonesia
Yuniatin Trisnawati D.K.W Department of Accounting, Economics, and Business at Universitas Dharma AUB Surakarta, Indonesia

DOI:

https://doi.org/10.69725/aai.v2i1.375

Keywords:

Financial Distress, Return On As- sets (ROA), Debt to Equity Ratio (DER), Independent Board of Commissioners, Gender Diversity

Abstract

Purpose - This study examines the influence of financial ratios, represented by Return on Assets (ROA) and Debt to Equity Ratio (DER), and good corporate governance, represented by the Independent Board of Commissioners and Gender Diversity, on financial distress.

Design/methodology/approach - A quantitative approach was employed using secondary data from textile and garment manufacturing companies listed on the Indonesia Stock Exchange for the 2021–2023 period. Using purposive sampling, 20 companies were selected. Multiple linear regression analysis was used to test the hypotheses.

Findings - The results show that ROA, DER, the Independent Board of Commissioners, and Gender Diversity each have no significant effect on financial distress. These findings indicate that, within the observed context, the selected financial ratio and governance variables do not significantly predict financial distress.

Originality/value - This study contributes to the financial distress and corporate governance literature by providing empirical evidence from the textile and garment sector during the post-pandemic recovery period, an emerging-market setting that remains relatively underexplored.

Research implications - The findings offer practical insights for managers, investors, and regulators in strengthening financial and governance practices. Future research may extend the observation period, include multiple industry sectors, and incorporate other variables such as Current Ratio, Debt to Assets Ratio, Return on Equity, managerial ownership, and board size.

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Author Biographies

Ramadhan Wahyu Sukamto , Department of Accounting, Faculty of Business and Economy, Dharma AUB University, Surakarta, Indonesia

Ramadhan Wahyu Sukamto is a researcher at the Department of Accounting, Economics and Business, Universitas Dharma AUB Surakarta, Indonesia. His research focuses on financial distress, financial ratio analysis, and corporate governance mechanisms. He is particularly interested in how financial indicators and governance structures influence firm performance and sustainability in emerging markets.
Yuniatin Trisnawati D.K.W, Department of Accounting, Economics, and Business at Universitas Dharma AUB Surakarta, Indonesia

Yuniatin Trisnawati DKW is an academic affiliated with the Department of Accounting, Economics, and Business at Universitas Dharma AUB Surakarta, Indonesia. Her expertise lies in financial accounting and corporate governance. Her research examines the intersection of financial reporting, governance practices, and firm financial distress prediction models

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