OIL PRICE CRISIS AND BANKRUPTCY RISK

Adhitya Agri Putra,D.P Emrinaldi Nur,Ferdy Putra

doi:10.32479/ijeep.11111

Adhitya Agri Putra, D.P Emrinaldi Nur + Show 1 more

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https://doi.org/10.32479/ijeep.11111

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Abstract

This research aims to examine the effect of the oil price crisis on bankruptcy risk. The sample consists of 9 oil and gas companies listed on the Indonesian Stock Exchange 2013-2019. The analysis method uses fixed-effect regression. The result shows that the oil price crisis increases bankruptcy risk, especially for companies with higher leverage. Furthermore, the oil price crisis reduces market value for companies with higher bankruptcy risk. It indicates that the oil price crisis brings performance for oil and gas companies to generate revenue, earnings, and cash flow that leads companies to insolvency condition.Keywords: oil price crisis, bankruptcy risk, companies' value.JEL Classifications: G32, G33, H12DOI: https://doi.org/10.32479/ijeep.11111

Highlights

Based on the Indonesian Economic Report by Bank Indonesia (2017), Indonesia is a developing country that is actively developing
There are several domestic structural challenges faced by the Indonesian economy, one of which is the structural challenge in achieving food, energy, and water security as input factors used in the transformation process towards industrialization
This research aims to examine the effect of the oil price crisis on bankruptcy risk

Summary

Introduction

Based on the Indonesian Economic Report by Bank Indonesia (2017), Indonesia is a developing country that is actively developing. There are several domestic structural challenges faced by the Indonesian economy, one of which is the structural challenge in achieving food, energy, and water security as input factors used in the transformation process towards industrialization. Barry (1991) states that industrialization is a strategy to advance the development process in a country. Industrialization is seen as a faster way to achieve prosperity than without going through this process. On this basis, almost all countries have or are currently implementing this strategy, the characteristics vary from one country to another. Because of the parallelism between the course of development and industrialization, there is an identical meaning between the two so that they cannot be separated

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