The Structure of Good Corporate Governance and Financial Indicators as Predictor of Financial Distress in Mining Sector Company in Indonesia

Abstract

The purpose of the paper are: (1) to examine financial indicators, including: current ratio, return on assets, debt to assets ratio, and total asset turn over as a predictor of financial distress in mining sector companies in Indonesia; (2) to examine the structure of Good Corporate Governance including: independent commissioner, audit committee, board of directors, independent audit committee ratios with non-independent, and institutional ownership ratio with managerial ownership as predictor of financial distress in mining sector company in Indonesia. Type of research is quantitative explanatory research. Sampling technique is used purposive sampling method, as many as 20 companies in the mining sector in Indonesia. Analytical techniques in this study uses logistic regression. The results of the research show that: current ratio, debt to asset ratio, total asset turnover, and institutional ownership ratio with managerial ownership are not predictors of financial distress in mining sector in Indonesia. However, return on Assets, independent commissioners, audit committees, boards of directors and independent audit committee ratios with non-independent are predictors of financial distress in mining companies in Indonesia.