FINANCIAL DISTRESS ANALYSIS OF DELISTED COMPANIES ON INDONESIAN STOCK EXCHANGE FOR PERIOD OF 2013-2019

Abstract

Companies can perform an Initial Public Offering (IPO) on the IDX to offer their shares to investors. Fluctuations in the JCI over a period of time, which can have different effects on the stock prices company. If the company fails to strategize and make the right decisions, financial problems can occur for years to come. This can affect the performance of the company on the IDX, which can lead to delisting. There are several delisted companies in 2013-2019. There was a downward trend from 2013 to 2016 but increased from 2017 to 2019. This study took samples of delisted companies on the IDX explored the financial health marked by financial distress. The findings serve to reduce the amount of risk of loss to investors by evaluating the Debt-Service Coverage Ratio (DSCR) as a reference to distinguish companies with good and bad financial health. Next, the sufficiency ratios were tested to see their effect on the DSCR. The results uncovered that long-term debt payments and depreciation-amortization impact have a significant effect on the DSCR. The mapping analysis of the cycle of financial distress showed that the majority of forced delisted companies are in the deterioration of performance and cash flow problem. While the majority of voluntarily delisted companies are in the category of good company. Supporting data from the revenue of forced delisted and voluntarily delisted companies showed a positive trend with the DSCR. Meanwhile, in terms of stock prices, there is no similarity between the chart trends and the DSCR.

Keywords

• financial distress
• delisted companies
• debt service coverage ratio
• revenue
• sufficiency ratios
• stock prices