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November 2, 2010

Determinant of Corporate Financial Distress in an Emerging Market Economy: Empirical Evidence from the Indonesian Stock Exchange 2004-2008

Koes Pranowo
Graduate School of Management and Business Bogor Agricultural University, Indonesia
Graduate Program of Management ABFI Institute of Perbanas Jakarta, Indonesia
E-mail: kpranowo@gmail.com (preferred) or koes@sism.co.id

Noer Azam Achsani
Department of Economics and Graduate School of Management and Business
Bogor Agricultural University, Indonesia
E-mail: achsani@yahoo.com (preferred) or achsani@mb.ipb.ac.id

Adler H.Manurung
Graduate School of Management and Business Bogor Agricultural University, Indonesia
Graduate Program of Management ABFI Institute of Perbanas Jakarta, Indonesia
E-mail: manurung_adler@yahoo.com

Nunung Nuryartono
Department of Economics and Graduate School of Management and Business
Bogor Agricultural University, Indonesia
E-mail: nuryartono@yahoo.com

Abstract
This study empirically examines the dynamics of corporate financial distress of public companies (non financial companies) in Indonesian (IDX) for the period of 2004- 2008. Using panel data regression, we analyze internal and external factors affecting corporate financial distress. To distinguish the status of financial condition, the process of integral corporate financial distress is classified into four steps: good, early impairment,deterioration and cash flow problem companies.

The results show that current ratio (CR), efficiency (Eff), equity (EQ) and dummy variable of the status good financial condition (D3) have positive and significant influences to Debt Service Coverage (DSC) as a proxy of financial distress. On the other hand, leverage (Lev) has a negative and significant relation with DSC. Other variables such as profit, retain earning (RE), good corporate governance (GCG) and macroeconomic factor have no significant impact on the status of corporate financial distress. Furthermore, the analysis indicated that profitable companies should not be a guarantee that the companies can survive to fulfill its liabilities. Liquidity of companies which can be a prominent point can be recognized by evaluating cash flow performance.

Keywords: Debt Service Coverage (DSC), Panel Data, Corporate Financial Distress,Indonesia Stock Exchange (IDX).

Artikel selengkapnya dalam PDF File Klik Disini

The Dynamics of Corporate Financial Distress in Emerging Market Economy: Empirical Evidence from the Indonesian Stock Exchange 2004-2008

Koes Pranowo
Graduate School of Management and Business, Bogor Agricultural University, Indonesia
Magister of Management Post Graduate Program, ABFII Institute of Perbanas, Indonesia
E-mail: kpranowo@gmail.com (preferred) or koes@sism.co.id

Noer Azam Achsani
Department of Economics and Graduate School of Management and Business
Bogor Agricultural University, Indonesia
E-mail: achsani@yahoo.com (preferred) or achsani@mb.ipb.ac.id

Adler H.Manurung
Graduate School of Management and Business, Bogor Agricultural University, Indonesia
Magister of Management Post Graduate Program, ABFII Institute of Perbanas, Indonesia
E-mail: manurung_adler@yahoo.com

Nunung Nuryartono
Department of Economics and Graduate School of Management and Business
Bogor Agricultural University, Indonesia
E-mail: nuryartono@yahoo.com

Abstract

This paper empirically examines the dynamics of financial distress among non-financial companies listed on the Indonesian Stock Exchange (IDX) during the period of 2004-2008. Two different events affected the performance of public companies being financial distress. In 2005, there was an oil price shock when the government cut off subsidy for local oil price. Another event in 2007-2008 is the impact of sub-prime mortgage in the USA, where US Dollar repatriation makes global financial crisis included Indonesia.

Mostly, financial burden of public companies in Indonesia are cost of money, mainly due to having bank loan and issuing corporate bond. Therefore, the analysis uses Debt Service Coverage (DSC) as a proxy financial distress. DSC becomes one of the most important indicators for commercial bank to see financial condition prior to lending as well as underwriting of bond issuance. This paper would also analyze corporate financial distress by mapping companies in to the steps of process integral financial distress in declining financial performance from good companies, early impairment, deterioration and cashflow problem. Furthermore, mapping will also been done for five different industrial sectors, i.e. agricultural business, mining, manufacture, contruction/properties and services/trade.

The results show that oil price shock and sub-prime mortgage crisis have different impacts on the financial performance of the companies listed on the IDX. The impacts seem also varies across different industrial sectors. The evidence indicated that the mining companies are the most affected companies by global financial crisis in 2008, whereas manufacturing companies are the most affected companies by oil price shock in 2005.

Keywords: Debt Service Coverage (DSC), Corporate Financial Distress, Indonesia Stock Exchange (IDX).

Artikel lengkapnya dalam format PDF Klik Disini

August 19, 2010

Testing the Feasibility of ASEAN+3 Single Currency Comparing Optimum Currency Area and Clustering Approach

Filed under: Karya ilmiah — achsani @ 2:50 pm

Noer Azam Achsani
Department of Economics and Graduate School of Management and Business, Bogor Agricultural University, Indonesia
E-mail: achsani@yahoo.com (preferred) or achsani@mb.ipb.ac.id
Tel: +62-251-8313813; Fax: +62-251-8318515

Titis Partisiwi
Department of Economics, Bogor Agricultural University, Indonesia
E-mail: tiesdende@yahoo.co.id
Tel: +62-251-8626602; Fax: +62-251-8626602

Abstract

This paper analyzes the possibility of currency integration among ASEAN+3 countries, which consists of Indonesia, Malaysia, Singapore, Philippines, Thailand, China, Japan, and South Korea. Two different methods are employed, i.e. the exchange rate variability based on OCA index and hierarchical clustering analysis.

The result showed that Singapore Dollar was the most stable currency in the region during the period of analysis. Furthermore, both methods confirm that the ASEAN+3 single currency –if it will be established– should start with Malaysia and Singapore, followed then by Japan, Thailand, South Korea and China. On the other hand, Indonesia seems to be lag behind and therefore this country should work harder to join the single currency.

Keywords: ASEAN+3, economic integration, optimum currency area, single currency.
JEL Classification Codes: E32, F02, F15, F31

Artikel selengkapnya : PDF Files

Stability of Money Demand in an Emerging Market Economy: An Error Correction and ARDL Model for Indonesia

Filed under: Karya ilmiah — achsani @ 2:47 pm

Noer Azam Achsani
Department of Economics and Graduate School of Management and Business
Bogor Agricultural University, Indonesia
E-mail: achsani@yahoo.com (preferred) or achsani@mb.ipb.ac.id
Tel: +62-251-8313813; Fax: +62-251-8318515

Abstract
Predicting a stable money demand function is one of the key elements of monetary policy since monetary aggregates has theoretically important influences on output, interest rate and ultimate price level. By employing the vector error correction model (VECM) and autoregressive distributed lag (ARDL) approach, this paper investigates the M2 money demand for Indonesia in the period of 1990:1-2008:3.
The results indicate that the demand for real M2 money aggregate is cointegrated with real income and interest rate. The real income has positive relationship with real money demand, both in the long-run and short-run. On the other hand, interest rate has a negative influence on M2 in the short-run, but has no statistically significant relationship in the long-run. Furthermore, we find that the ARDL model is more appropriate in predicting stable money demand function of Indonesia in compare to VECM.

Keywords: Money demand, cointegration, ARDL model, stability test
JEL Classification Codes: E41, E44, G2

Artikel selengkapnya : PDF Files

An Analysis Of Energy Intensity In Indonesian Manufacturing

Filed under: Karya ilmiah — achsani @ 2:19 pm

Tony Irawan,
Department of Economics, Faculty of Economics and Management, Bogor Agricultural University; InterCAFE-LPPM, IPB,
Email: aragorn042002@yahoo.com

Djoni Hartono,
Graduate Program in Economics, Faculty of Economics and Business, University of Indonesia,
Email: djoni.hartono@ui.ac.id / djoni.hartono@gmail.com

Noer Azam Achsani,
Department of Economics, Faculty of Economics and Management, Bogor Agricultural University; InterCAFE-LPPM, IPB,
Email: achsani@yahoo.com


Abstract

Many countries utilize their resources at optimal capacity in fostering countries’ economic growth without any concern on environmental impact. Even though the importance of environmental issue as one of the important aspects in sustainable development is fully understood, the economic growth still remained as the priority target. In Indonesia, industry is one of the important sectors both in term of its contribution to national output and national energy consumption. Based on Indonesian Statistic Bureau, industry is always at the top list of contributor of national energy consumption since 2000. This paper employs the decomposition analysis to calculate what factors contribute to the change in energy intensity. We also conduct a panel data analysis to investigate the determinants of energy intensity using firm level data. The result suggests that, even though the industrial sector’s energy intensity is higher than national level, it varied across sub sectors within the industry. Meanwhile, the econometric analysis suggests that wage, age, capital intensity and share of capital owned by private sector have positive impact on energy intensity, whereas size of firms, labor productivity and technology intensity has negative impact on energy intensity.

Keywords: energy

Artikel selengkapnya : Dalam pdf

Classification of the ASEAN+3 Economies Using Fuzzy Clustering Approach

Filed under: Karya ilmiah — achsani @ 2:12 pm

Noer Azam Achsani
Department of Economics and Graduate School of Management and Business Bogor
Agricultural University, Indonesia
E-mail: achsani@yahoo.com (preferred) or achsani@mb.ipb.ac.id
Tel: +62-251-8313813; Fax: +62-251-8318515

Hermanto Siregar
Department of Economics and International Centre for Applied Finance and Economics Bogor
Agricultural University, Indonesia
E-mail: hermansiregar@yahoo.com Tel: +62-251-8377662; Fax: +62-251-8377896

Abstract

The success story of the EU in establishing a single market in 1999 have motivated ASEAN+3 region to further integrate their economy. It is therefore interesting to assess whether the ASEAN+3 economies may be seen as a single major entity or actually as a number of significantly different clusters.

This study attempts to classify members of ASEAN+3 countries into clusters, employing the Fuzzy Clustering Approach. The results show that the Countries can be classified into five clusters. Singapore, Japan, Korea, and China can be seen as the leading economies in the region. Moreover, our analysis using data before, during and after the Asian Financial Crisis seems to be consistent. Therefore, in order for the single market to function effectively, when taking initiatives these countries should consider Limitations and bottlenecks faced by other countries within the region.

Keywords: ASEAN+3, economic integration, fuzzy clustering approach.
JEL Classification Codes: C14, F15, F31, F36

Artikel Selengkapnya: Artikel dalam pdf file

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