Financial Distress Prediction: The Ownership Structure and Managerial Agency Cost

Abstract

This research aimed to predict financial distress through ownership structure and managerial agency cost. The ownership structure was tested by managerial ownership and institutional ownership. Meanwhile, the managerial agency cost was tested by the administrative cost ratio. The population of this research was all companies listed in the Indonesia Sharia Stock Index year 2016-2018 by using the purposive sampling technique. Based on the criteria that have been determined, the total samples were 129 companies. The analysis of the data in this research used logistic regression analysis. The results showed that institutional ownership has a negative effect on financial distress. Despite this, the managerial ownership and managerial agency cost does not affect the financial distress.

Keywords

• ownership structure
• managerial agency cost
• financial distress
• indonesia sharia stock index
• logistic regression analysis