The Influence of Corporate Governance on Company Financial Difficulties with Political Connections as Moderation


  • Teddy Jurnali
  • Wulan Angreni Universitas Internasional Batam


financial difficulties, political connections, family ownership, board size


This study aims to analyze the influence of corporate governance on corporate financial distress with political connections as a moderation. The research population used is data from manufacturing companies listed on the Indonesia Stock Exchange (IDX) from the 2017-2021 period. Sampling using purposive sampling. Data analysis was performed using panel data regression and using Eviews software. Research shows that board size has a negative effect on financial distress, while family ownership has no significant effect. This research shows that political connections can strengthen the relationship between board size and family ownership of financial distress in companies


Download data is not yet available.


Agustina, Y., & Anwar, CE (2021). The Influence of Corporate Governance Structures on Financial Distress: A Study of Coal Mining Companies. KnE Social Sciences, 2021, 313–321.

Ahmaddien, I., & Susanto, B. (2020). Eviews 9: Panel Data Regression Analysis. IdeasPublishing, 1–95.

Ayu, AS, Handayani, SR, & Topowijono, T. (2017). THE INFLUENCE OF LIQUIDITY, LEVERAGE, PROFITABILITY AND COMPANY SIZE ON FINANCIAL DISTRESS Study of Manufacturing Companies in the Basic Industry and Chemical Sectors Listed on the Indonesia Stock Exchange in 2012-2015. Journal of Business Administration, 43(1), 138–147.

Bassett, M., Koh, P. S., & Tutticci, I. (2007). The Association Between Employee Stock Option Disclosures and Corporate Governance: Evidence From an Enhanced Disclosure Regime. British Accounting Review, 39(4), 303–322.

Basuki, AT, & Prawoto, N. (2016). Regression Analysis in Economics and Business Research: Equipped with SPSS and Eviews Applications. Rajawali Press, Jakarta.

Bianchi, M.T., Monteiro, P., Azevedo, G., Oliveira, J., Viana, R.C., & Branco, M.C. (2019). Political connections and corporate social responsibility reporting in Portugal. Journal of Financial Crime, 26(4), 1203–1215.

Bulog, I., Jukić, I., & Kružić, D. (2017). Managerial Skills: Does Family Ownership Make a Difference? International OFEL Conference on Governance, Management and Entrepreneurship, 4, 346–360.

Candradewi, MR, & Rahyuda, H. (2021). The Influence of Financial Indicators, Corporate Governance and Macroeconomic Variables on Financial Distress. Journal of Applied Quantitative Economics, 145.

Crespí-Cladera, R., Martín-Oliver, A., & Pascual-Fuster, B. (2021). Financial distress in the hospitality industry during the Covid-19 disaster. Tourism Management, 85(February).

Chandra, B., & Junita, N. (2021). Corporate governance and earnings management on dividend policy in Indonesia. Journal of Modernization Economics, 17(1), 15–26.

Chandra, B., & Cintya, C. (2021). Efforts to practice Good Corporate Governance in tax avoidance in Indonesia. Journal of Modernization Economics, 17(3), 232–247.

Christian, N. (2022). The Mediation Effect of Financial Difficulties in Detecting Corporate Fraud in Indonesia. Journal of Accounting Studies, 6(1), 44-69.

Damajanti, A., Wulandari, H., & Rosyati, R. (2021). The Influence of Financial Ratios on Financial Distress in Retail Trading Sector Companies on the Indonesian Stock Exchange 2015-2018. Solutions, 19(1), 29–44.

Dirman, A. (2020). Financial Distress: The Impacts Of Profitability, Liquidity, Leverage, Firm Size, And Free Cash Flow. International Journal of Business, Economics and Law, 22(1), 1.

Du, J., Bai, T., & Chen, S. (2019). Integrating corporate social and corporate political strategies: Performance implications and institutional contingencies in China. Journal of Business Research, 98(June 2017), 299–316.

Edi, E., & Tania, M. (2018). The accuracy of the Altman, Springate, Zmijewski, and Grover models in predicting financial distress. Journal of Accounting and Finance Review, 8(1), 79-92.

Erdayosi, E., & Putri, WA (2019). The Effect of Political Connection of CSR Disclosure With Profitability As Moderating Variable. Journal of Applied Managerial Accounting, 3(2), 247–261.

Faccio, M. (2006). Politically connected firms. American Economic Review, 96(1), 369–386.

Ghozali, I. (2016). Multivariate Analysis Applications with the IBM SPSS Program (8th ed.). Diponegoro University Publishing Agency.

Hakim, R., Wirawisata, ), & Yetti, S. (2015). the Effect of Firm Size, Leverage, Sales Growth and Profitability on Financial Distress (Empire Study on Property and Real Estate Sector Companyson Idx). Jambi Accounting Review (JAR) JAR, 2(2), 128–143.

Ibrahim, R. (2019). Corporate governance effect on financial distress: evidence from In-donesian public listed companies. Journal of Economics, Business & Accountancy Ventures, 21(3), 415.

Jahid, MA, Rashid, MHU, Hossain, SZ, Haryono, S., & Jatmiko, B. (2020). Impact of corporate governance mechanisms on corporate social responsibility disclosure of publicly-listed banks in Bangladesh. Journal of Asian Finance, Economics and Business, 7(6), 61–71.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.

Kalda, A. (2019). Peer Financial Distress and Individual Leverage. SSRN Electronic Journal.

Kamaluddin, A., Ishak, N., & Mohammed, NF (2019). Financial distress prediction through cash flow ratios analysis. International Journal of Financial Research, 10(3), 63–76.

Karim, S., Manab, NA, & Ismail, R.B. (2020). The dynamic impact of board composition on CSR practices and their mutual effect on organizational returns. Journal of Asian Business Studies, 14(4), 463–479.

Kazemian. (2015). harahap, 2015. Financial Reports, Financial Distress, 12(2004), 106.

Khafid, M., Tusyanah, T., & Suryanto, T. (2019). Analyzing the determinants of financial distress in Indonesian mining companies. International Journal of Economics and Business Administration, 7(4), 353–368.

Kim, C., & Zhang, L. (2016). Corporate Political Connections and Tax Aggressiveness. Contemporary Accounting Research, 33(1), 78–114.

Kisman, Z., & Krisandi, D. (2019). How to Predict Financial Distress in the Wholesale Sector: Lessons from the Indonesian Stock Exchange. Journal of Economics and Business, 2(3), 569–585.

Konopaski, M., Jack, S., & Hamilton, E. (2015). Family Business Members_id. 14(3), 347–364.

Kurniawati, N., & Aligarh, F. (2021). Ownership Structure, Independent Commissioners, Company Size, and Financial Distress in Manufacturing Companies in Indonesia. JAPP: Journal of Accounting, Taxation, and Portfolio, 01(02), 81–97.

Lin, W.L., Sambasivan, M., Ho, J.A., & Law, S.H. (2019). Corporate political activity and financial performance: A corporate social responsibility perspective. International Symposia in Economic Theory and Econometrics, 26, 236–264.

Mahdiana, MQ, & Amin, MN (2020). The Influence of Profitability, Leverage, Company Size, and Sales Growth on Tax Avoidance. Trisakti Accounting Journal, 7(1), 127–138.

Marquis, C., & Qian, C. (2014). Corporate social responsibility reporting in China: Symbol or substance? Organization Science, 25(1), 127–148.

Mathova, A., Perdana, HD, & Rahmawati, IP (2017). The Influence of Family Ownership and Good Corporate Governance on Profit Quality and Company Performance. SAR (Soedirman Accounting Review): Journal of Accounting and Business, 2(1), 73.

Mattiara, NS, Saerang, IS, & Tulung, JE (2020). The Influence of Institutional Ownership, Board Size and Leverage on Financial Performance in the Non-Bank Financial Industry Listed on the Indonesian Stock Exchange 2014-2018. EMBA Journal: Journal of Economics, Management, Business And Accounting Research, 8(3), 306–316.

Minh Ha, N., Do, B.N., & Ngo, T.T. (2022). The impact of family ownership on firm performance: A study on Vietnam. Cogent Economics and Finance, 10(1).

Mselmi, N., Lahiani, A., & Hamza, T. (2017). Financial distress prediction: The case of French small and medium-sized firms. International Review of Financial Analysis, 50, 67–80.

Muliawati, AR, & Hariyati, H. (2021). The Influence of Political Connections and Media Exposure on Disclosure of Social Responsibility. Journal of Accounting and Economics, 11(1), 72–81.

Muttakin, M.B., Mihret, D.G., & Khan, A. (2018). Corporate political connections and corporate social responsibility disclosures: A neo-pluralist hypothesis and empirical evidence. Accounting, Auditing and Accountability Journal, 31(2), 725–744.

Nasiroh, Y., & Priyadi, MP (2018). The Effect of GCG Implementation on Financial Distress. Journal of Accounting Science and Research, 7(9), 1–15.

Pearce, J. A., & Zahra, S. A. (1992). Board Composition From a Strategic Contingency Perspective. Journal of Management Studies, 29(4), 411–438.

Permana, K., & Umiyati, I. (2022). the Effect of Board Size, Board Independence, Audit Committee on Financial Distress During Covid-19 Pandemic. International Seminar on Accounting Society, 5(2), 218–226.

Pradnyani, IGAA, & Sisdyani, EA (2015). The Influence of Company Size, Profitability, Leverage, and Board of Commissioners Size on Corporate Social Responsibility Disclosure. Accounting E-Journal, 11(2), 384–397.

Rauf, F., Voinea, C.L., Hashmi, H.B.A., & Fratostiteanu, C. (2020). Moderating effect of political embeddedness on the relationship between resource base and quality of CSR disclosure in China. Sustainability (Switzerland), 12(8).

Rouf, M.A., & Hossan, M.A. (2021). The effects of board size and board composition on CSR disclosure: a study of banking sector in Bangladesh. International Journal of Ethics and Systems, 37(1), 105–121.

Ryan, Cooper, & Tauer. (2013).済無No Title No Title No Title. Paper Knowledge . Toward a Media History of Documents, 2005, 12–26.

Santoso, L., & Nugrahanti, YW (2022). the Effect of Ownership Structure on Financial Distress: Evidence in Indonesian Manufacturing Companies. Journal of Contemporary Accounting Research, 14(1), 55–64.

Sayari, N., & Mugan, C.S. (2017). Industry specific financial distress modeling. BRQ Business Research Quarterly, 20(1), 45–62.

Setiawati, LW, & Lim, M. (2018). Analysis of the Influence of Profitability, Company Size, Leverage, and Social Disclosure on the Value of Manufacturing Companies Listed on the Indonesian Stock Exchange for the 2011-2015 Period. Journal of Accounting, 12(1), 29–57.

Sugiyono. (2017). Quantitative, Qualitative, and R&D Research Methods. Bandung: Alphabeta, CV.

Tjahjadi, B., Soewarno, N., & Mustikaningtiyas, F. (2021). Good corporate governance and corporate sustainability performance in Indonesia: A triple bottom line approach. Heliyon, 7(3), e06453.

Ullah, H., Wang, Z., ABBAS, M.G., ZHANG, F., SHAHZAD, U., & MAHMOOD, M.R. (2021). Association of Financial Distress and Predicted Bankruptcy: The Case of Pakistani Banking Sector*. Journal of Asian Finance, Economics and Business, 8(1), 573–585.

Williansyah, F., & Meiliana, M. (2022). Financial Distress: Effects of Ownership Structure, Board of Directors Characteristics, and Corporate Governance Index. Global Financial Accounting Journal, 6(2), 288.

Yopie, S. (2021). the Effect of Good Corporate Governance and Financial Distress on Real Earnings Management. Journal of Accounting, 11(3), 285-306.

Younas, N., UdDin, S., Awan, T., & Khan, M.Y. (2021). Corporate governance and financial distress: Asian emerging market perspective. Corporate Governance (Bingley), 21(4), 702–715.