A study on the probability of sustainability of state-owned enterprises (a review from the perspective of the bankruptcy model): article / Wayan Widnyana ... [et al.]

This study aimed to investigate how the external (such as growth, inflation, exchange rate) and internal factors influence the possibility of insolvency, in state owned enterprises (SOEs) and the moderating role of corporate governance. The study examined the SOEs in Indonesia, specifically analyzing financial data from the period between 2010 and 2019. The sample size consisted of an average of 112 companies. The analysis comprised of two phases; the first phase useds the Altman Z score model to evaluate the probability of bankruptcy followed by regression analysis in the second phase to identify the determinants of this probability. The findings indicated that certain external factors, such as inflation negatively influenced SOE profitability during bankruptcy while other factors such as leverage, and profitability were not significant. Corporate governance was found to heighten the impact of factors (growth, inflation, exchange rate) on profitability of bankruptcy. Nevertheless, it does not diminish the influence of interest rate fluctuations on bankruptcy profits. Furthermore, corporate governance was shown to heighten the impact of factors (such as liquidity, leverage, profitability) in reducing SOE profits during bankruptcy scenarios.