The Effect of Corporate Governance and Leverage on Financial Distress Measured by G-score

• Published in: Review of Integrative Business and Economics Research
• Main Author: Puspaningsih A.; Hudayati A.; Zulfikri M.
• Format: Article
• Language: English
• Published: GMP Press & Printing Co., 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85188915382&partnerID=40&md5=e0f1f10ddd0a94b0acd7c0c694595dc2

This study aims to analyze the effects of corporate governance and leverage on financial distress. During the COVID-19 pandemic many companies encountered financial distress which could lead to bankruptcy; therefore, a study with a more focus on factors causing financial distress is needed. In contrast to previous studies, this study uses G-score which is considered more accurate to measure financial distress than other models. The study population of this research is mining companies listed on the Indonesia Stock Exchange during the period 2015 to 2019. A purposive sampling method was used and data of 200 companies was collected. A multiple regression analysis was used to test the hypothesis. The results of the study show that the independence of board of commissioners has a negative effect on financial distress. However, the size of board of directors has a positive effect on financial distress. Meanwhile, audit committee, ownership structure, and leverage have no effects on financial distress. The findings of this study also suggest that independent board of commissioners and small size of board of directors can reduce the likelihood of financial distress. © 2024 GMP Press and Printing.