Predicting the Risk of Financial Distress using Intellectual Capital and Financial Ratio

Abstract

The economic downturn was resulting from the Covid-19 pandemic impacted financial difficulties in financial sector companies. Financial sector companies that have negative equity and were delisted from the IDX. So it is essential to know which indicators can be used to identify financial distress early and avoid bankruptcy. The goal to be achieved from the results of this study is to empirically determine the influence of the audit committee, intellectual capital, operating cash flow, and leverage on financial distress moderated by independent commissioners in financial sector companies in Indonesia. This study uses a quantitative approach This study uses a quantitative approach. The unit of analysis for this research is the financial sector from 2017 to 2021, with 235 observations. Using a purposive sampling technique, 57 companies were studied. The analytical method used is Moderated Regression which is processed using the SPSS 26 application. The results show that the audit committee and intellectual capital positively influence financial distress, while operating cash flow and leverage variables negatively affect financial distress. The study results show that the independent commissioner can moderate the effect of the dependent variable on financial desperation.