DEVELOPING MODEL TO PREDICT FINANCIAL DISTRESS ON BULLISH AND BEARISH MARKET CONDITION AS EARLY WARNING TOOLS BANKRUPTCY IN INDONESIA
Eka Bertuah, Rina Indiastuti, Sulaeman Rahman Nidar, Aldrin Herwany

Esa Unggul University, Jakarta, Indonesia
Padjadjaran University, Bandung, Indonesia
Padjadjaran University, Bandung, Indonesia
Padjadjaran University, Bandung, Indonesia

Abstract

This study aims to develop a model can be early warning system of financial distress occurs. Suspected factors affecting financial distress in terms of financial decision made, preference investors against profits and economic macro conditions that exert influence over the company performance. Based on these indicators, this research followed by design formulation and financial distress models.
Objects research chosen were manufacturing companies listed on Indonesian Stock Exchange in 2001 to 2014. Research started by observing market condition in bullish or bearish using regression analysis time series. Then analysis the data used was factor analysis and logistic regression.
The research results show that model prediction financial distress on condition bearish market has a accuracy higher than bullish market. This supports the pecking order theory in capital structure that shows when the companies need funding, so early funding alternative consideration is retained earnings.

Keywords: financial distress, bearish, bullish, early warning tools.

Topic: Financial Management and Accounting