The Effect of Leverage, Profitability, Agency Cost, and Inflation Rate in Predicting Company Factor

  • Syamsul Bachri Universitas Indonesia Timur, Indonesia
  • Juhasdi Susono STAI Al Furqan Makassar, Indonesia.
  • Mayang Alethea Universitas Negeri Jakarta, Indonesia
  • St Habibah STAI Al Furqan Makassar, Indonesia.
  • Ihsan Darwis STAI Al Furqan Makassar, Indonesia.
Keywords: Inflation Rate, Agency Cost, Profitability, Interest Rate Volatility, Leverage

Abstract

This study examines the effect of leverage as measured by debt to equity ratio, profitability as measured by return on assets, agency cost and inflation rate in predicting company factor of the financial distress with interest rate volatility as moderating variable. This study’s sample is 50 property and real estate companies listed on the Indonesia and Malaysia Stock Exchange from 2014to 2018. The statistical method used for hypothesis testing is obtained from logistic regression analysis with Financial Distress (Y) as the dummy variable. This study uses Altman Z-Score value as a prediction classification of companies experiencing financial distress or nonfinancial distress. The research results showed that leverage had a significant positive effect on financial distress, while the inflation rate had a significant adverse effect on financial distress with a level of significant below 0,05 (p≤ 0,05). The other ratio are profitability, agency cost, and interest rate volatility have no significant effect on the financial distress of property and real estate companies listed on Indonesia and Malaysia Stock Exchange from 2014 to 2018. The result of Moderated Regression Analysis (MRA)effect leverage, profitability, agency cost and inflation rate variable has valued above0,05 (p≥ 0,05), which means interest rate volatility has no significant effect as a moderating variable of leverage, profitability, agency cost and inflation rate on financial distress.

References

Aulia Pohan. (2008). Potret Kebijakan Moneter Indonesia. Cetakan Pertama. PT Raja Grafindo Jakarta.
Bernstein, L. A., & John, J. W. (1998). Financial Statement Analysis : Theory, Applications and Interpretation (6th ed.). Mc Grow Hill.
DP, E. N., & Wulandari, V. (2014). Analisis Perbandingan Model Altman, Springate, Ohlson, Fulmer, CA-Score dan Zmijewski Dalam Memprediksi Financial Distress (studi empiris pada Perusahaan Food and Beverages yang Terdaftar di Bursa Efek Indonesia Periode 2010-2012). Jurnal Online Mahasiswa Fakultas Ekonomi Universitas Riau.
Kamaludin, & Pribadi, K. A. (2011). Prediksi Financial Distress Kasus Industri Manufaktur Pendekatan Model Regresi Logistik. Jurnal Ilmiah.
Mankiw, N. G. (2013). Defending the one percent. Journal of Economic Perspectives. https://doi.org/10.1257/jep.27.3.21
Samadara, P. D. (2020). Internal Service Quality and Employee Performance. The International Journal of Social Sciences World (TIJOSSW), 2(01), 109-115.
Platt, H., & Platt, M. (2006). Understanding Differences Between Financial Distress and Bankruptcy. Review of Applied Economics.
Published
2021-02-19
How to Cite
Bachri, S., Susono, J., Alethea, M., Habibah, S., & Darwis, I. (2021). The Effect of Leverage, Profitability, Agency Cost, and Inflation Rate in Predicting Company Factor . The International Journal of Social Sciences World (TIJOSSW), 3(01), 86-97. Retrieved from https://www.growingscholar.org/journal/index.php/TIJOSSW/article/view/94
Section
Articles

Most read articles by the same author(s)