The Effect of Board of Directors' Diversity on Financial Distress in Energy Companies in Indonesia

Authors

  • Rangga Dhia Majduddin Universitas Muhammadiyah Surakarta, Indonesia
  • Sri Widyaningsih Universitas Muhammadiyah Surakarta, Indonesia
  • Hidayatul Nikmah Universitas Muhammadiyah Surakarta, Indonesia

DOI:

https://doi.org/10.35917/tb.v25i1.493

Keywords:

financial distress, board diversity, gender, nationality, age, board size

Abstract

The purpose of this study is to determine the role of board diversity in the form of the presence of female directors, the presence of foreign directors, the age of directors and the size of the board of directors against the risk of financial distress by conducting logistic regression testing on energy sector companies in Indonesia during 2018-2022. The results showed that the presence of female directors and the size of the board of directors negatively affected the risk of financial distress. Further research can test separately the period before the pandemic and after the pandemic so that the characteristics of each can be known in more detail. In addition, it can add cognitive diversity factors  such as education, expertise and tenure of directors. This research can be used as a reference to determine non-financial factors that can affect the possibility of financial distress experienced by the company.

Downloads

Download data is not yet available.

References

Abbas, A., & Frihatni, A. A. (2023). Gender diversity and firm performances suffering from financial distress: evidence from Indonesia. Journal of Capital Markets Studies, 7(1), 91–107. https://doi.org/10.1108/jcms-12-2022-0045

Ain, Q. U., Yuan, X., Javaid, H. M., Usman, M., & Haris, M. (2020). Female directors and agency costs: evidence from Chinese listed firms. International Journal of Emerging Markets. https://doi.org/10.1108/IJOEM-10-2019-0818

Aksoy, M., & Yilmaz, M. K. (2023). Does board diversity affect the cost of debt financing? Empirical evidence from Turkey. Gender in Management, 38(4), 504–524. https://doi.org/10.1108/GM-01-2022-0021

Aktas, N., De Bodt, E., Lobez, F., & Statnik, J.-C. (2012). The information content of trade credit. http://ssrn.com/abstract=1568046http://ssrn.com/abstract=1568046

Ali, S., Rehman, R. ur, Aslam, S., Khan, I., & Murtaza, G. (2023). Does board diversity reduce the likelihood of financial distress in the presence of a powerful Chinese CEO? Management Decision, 61(6), 1798–1815. https://doi.org/10.1108/MD-01-2022-0007

Altman, E. I. (1968). American Finance Association Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. In Source: The Journal of Finance (Vol. 23, Issue 4). http://www.jstor.orgURL:http://www.jstor.org/stable/2978933http://www.jstor.org/stable/2978933?seq=1&cid=pdf-reference#references_tab_contents

Badan Pusat Statistik. (2020). Analisis Hasil Survei Dampak Covid-19 Terhadap Pelaku Usaha.

Balasubramanian, S. A., Radhakrishna, G. S., Sridevi, P., & Natarajan, T. (2019). Modeling corporate financial distress using financial and non-financial variables: The case of Indian listed companies. International Journal of Law and Management, 61(3–4), 457–484. https://doi.org/10.1108/IJLMA-04-2018-0078

Bernile, G., Bhagwat, V., & Yonker, S. (2018). Board diversity, firm risk, and corporate policies. Journal of Financial Economics, 127(3), 588–612. https://doi.org/10.1016/j.jfineco.2017.12.009

Bhat, K. U., Chen, Y., Jebran, K., & Memon, Z. A. (2020). Board diversity and corporate risk: evidence from China. Corporate Governance (Bingley), 20(2), 280–293. https://doi.org/10.1108/CG-01-2019-0001

Farooq, M., Khan, I., Jabri, Q. Al, & Khan, M. T. (2023). Does corporate social responsibility mediate the relationship between board diversity and financial distress: evidence from an emerging economy? Corporate Governance (Bingley). https://doi.org/10.1108/CG-05-2023-0210

Fatima, D. F., Muharam, H., & Octavio, D. Q. (2023). ANALISIS PENGARUH KEBERAGAMAN DEWAN DIREKSI TERHADAP KEMUNGKINAN FINANCIAL DISTRESS DENGAN ROA DAN FIRM SIZE SEBAGAI VARIABEL KONTROL (Studi Kasus pada Bank Umum yang Terdaftar di BEI pada Tahun 2016-2020). DIPONEGORO JOURNAL OF MANAGEMENT, 12(1). http://ejournal-s1.undip.ac.id/index.php/dbr

García, C. J., & Herrero, B. (2021). Female directors, capital structure, and financial distress. Journal of Business Research, 136, 592–601. https://doi.org/10.1016/j.jbusres.2021.07.061

Guizani, M., & Abdalkrim, G. (2023). Does gender diversity on boards reduce the likelihood of financial distress? Evidence from Malaysia. Asia-Pacific Journal of Business Administration, 15(2), 287–306. https://doi.org/10.1108/APJBA-06-2021-0277

Gupta, V. K., Mortal, S., Chakrabarty, B., Guo, X., & Turban, D. B. (2020). CFO Gender and Financial Statement Irregularities. In Journal: Academy of Management Journal Manuscript ID. https://doi.org/10.5465/amj.2017.0713

Harjoto, M. A., Laksmana, I., & Yang, Y. wen. (2018). Board diversity and corporate investment oversight. Journal of Business Research, 90, 40–47. https://doi.org/10.1016/j.jbusres.2018.04.033

Jensen, M. C., & Meckling, W. H. (1976). THEORY OF THE FIRM: MANAGERIAL BEHAVIOR, AGENCY COSTS AND OWNERSHIP STRUCTURE. In Journal of Financial Economics (Vol. 3). Q North-Holland Publishing Company. https://doi.org/10.1016/0304-405X(76)90026-X

Kurniawan, M. A., Hariadi, K. E., Sulistyaningrum, W. O., & Budi Kristanto, A. (2021). Pandemi COVID-19 dan Prediksi Kebangkrutan: Apakah Kondisi Keuangan Sebelum 2020 Berperan? Kerinea Estetika Hariadi 2 Widya Oktarina Sulistyaningrum 3. Jurnal Akuntansi, 13(1), 12–22. http://journal.maranatha.edu

Lee, S. C., Rhee, M., & Yoon, J. (2018). Foreign monitoring and audit quality: Evidence from Korea. Sustainability (Switzerland), 10(9). https://doi.org/10.3390/su10093151

Loukil, N., Yousfi, O., & Yerbanga, R. (2019). Does gender diversity on boards influence stock market liquidity? Empirical evidence from the French market. Corporate Governance (Bingley), 19(4), 669–703. https://doi.org/10.1108/CG-09-2018-0291

Maier, F., & Yurtoglu, B. B. (2022). Board Characteristics and the Insolvency Risk of Non-Financial Firms. Journal of Risk and Financial Management. https://doi.org/10.3390/jrfm

Mariano, S. S. G., Izadi, J., & Pratt, M. (2020). Can we predict the likelihood of financial distress in companies from their corporate governance and borrowing? International Journal of Accounting and Information Management, 29(2), 305–323. https://doi.org/10.1108/IJAIM-08-2020-0130

Marie, M., Kamel, H., & Elbendary, I. (2021). How does internal governance affect banks’ financial stability? Empirical evidence from Egypt. International Journal of Disclosure and Governance, 18(3), 240–255. https://doi.org/10.1057/s41310-021-00110-8

Mehmood, A., & De Luca, F. (2023). Financial distress prediction in private firms: developing a model for troubled debt restructuring. Journal of Applied Accounting Research. https://doi.org/10.1108/JAAR-12-2022-0325

Pfeffer, J., & Salancik, G. (2003). The External Control of Organizations - A Resource Dependence Perspective (Stanford Business Classics). Stanford Business Books.

Rizal, M. N., Izdihar, M. D., Sampurna, N. W., & Irawan, F. (2022). KINERJA KEUANGAN EMITEN BATUBARA DI MASA PANDEMI COVID-19. Jurnalku, 2(4). https://doi.org/10.54957/jurnalku.v2i4.288

Ud-Din, S., Khan, M. Y., Javeed, A., & Pham, H. (2020). Board Structure and Likelihood of Financial Distress: An Emerging Asian Market Perspective. Journal of Asian Finance, Economics and Business, 7(11), 241–250. https://doi.org/10.13106/jafeb.2020.vol7.no11.241

TB 25(1) Cover

Downloads

Additional Files

Published

2024-08-13

How to Cite

Majduddin, R. D., Widyaningsih, S., & Nikmah, H. (2024). The Effect of Board of Directors’ Diversity on Financial Distress in Energy Companies in Indonesia. Telaah Bisnis, 25(1), 26–33. https://doi.org/10.35917/tb.v25i1.493

Issue

Vol. 25 No. 1 (2024): July 2024

Section

Articles

Citation Check

License

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).

Similar Articles

<< < 1 2 3 4 5 

You may also start an advanced similarity search for this article.