The Safeguarding Firms from Financial Distress: The Effects of Cash Holding, Leverage, and Audit Committee Effectiveness in Indonesia and Malaysia’s F&B Industry
Keywords:
Cash Holding, Leverage, audit committee effectiveness, financial distress, Food and BeverageAbstract
This study examines the effect of cash holding, leverage, and audit committee effectiveness (ACE) on financial distress in Food and Beverage (F&B) sub-sector companies listed on the Indonesia Stock Exchange (BEI) and Bursa Malaysia for the 2022–2024 period. The research is motivated by economic instability following the Covid-19 pandemic which significantly impacted F&B companies in both countries, alongside inconsistencies in prior research findings. Agency Theory and Trade-Off Theory serve as the theoretical basis. A quantitative approach with secondary data from company annual reports is employed. The population consisted of 100 companies (78 BEI and 22 Bursa Malaysia), with a final sample of 88 companies or 264 observations selected through purposive sampling. Financial distress is measured using the Altman Z''-Score model (Z'' < 2.6 as the distress threshold). Data analysis used binary logistic regression via SPSS v.25. Results show: (1) cash holding has a significant negative effect on financial distress; (2) leverage has a significant positive effect on financial distress; (3) audit committee effectiveness measured by meeting frequency has no significant effect on financial distress; and (4) simultaneously, the three variables significantly affect financial distress with a Nagelkerke R Square of 50.2% and model prediction accuracy of 84.5%.
Downloads
References
Altman, E. I. (2017). Distressed Firm and Bankruptcy Prediction in an International Context: A Review and Empirical Analysis of Altman's Z-Score Model.
Anisah Shukry. (2021). Malaysia's Economy Sees Worst Year Since 1998 Asian Crisis. Bloomberg.
Badan Pusat Statistik (BPS). (2021). Pertumbuhan Ekonomi Indonesia Triwulan IV-2020. www.bps.go.id.
Brigham, E. F., & Houston, J. F. (2018). Fundamentals of Financial Management. Cengage Learning.
Chang, C. C., & Yang, H. (2022). The role of cash holdings during financial crises. Pacific Basin Finance Journal, 72, 101733.
Department of Statistics Malaysia (DOSM). (2024). Economic Census 2023: Food and Beverage Services Sector.
Dewi, Endiana, I. D. M., & Arizona, I. P. E. (2019). Pengaruh Rasio Likuiditas, Rasio Leverage dan Rasio Profitabilitas Terhadap Financial Distress Pada Company Manufaktur. Journal of Chemical Information and Modeling, 53, 1689–1699.
Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS. Universitas Diponegoro.
Hadjaat, M., Yudaruddin, R., & Riadi, S. S. (2021). The Impact of Financial Distress on Cash Holdings in Indonesia: Does Business Group Affiliation Matter? Journal of Asian Finance, Economics and Business, 8(3), 373–381.
Hosmer, D. W., & Lemeshow, S. (2000). Applied Logistic Regression (2nd ed.). Wiley.
Intan Tiara Kartika, Zulfikar Adjie, A. A. (2024). Pandemic COVID-19, Unemployment, Poverty, ASEAN, Economic Vulnerabilities. Jurnal Ilmiah Manajemen dan Company, 4, 1156–1169.
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.
Kementerian Perindustrian Republik Indonesia (Kemenperin). (2021). Pasok Kebutuhan Pangan Selama Pandemi, Kontribusi Industri Mamin Meroket.
Myers, S. C. (1984). The Capital Structure Puzzle. Journal of Finance.
Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of Financial Economics, 52(1), 3–46.
Otoritas Jasa Keuangan RI. (2015). Peraturan Otoritas Jasa Keuangan Nomor 55/POJK.04/2015 tentang Pembentukan dan Pedoman Pelaksanaan Kerja Komite Audit.
Platt, H. D., & Platt, M. B. (2002). Predicting Corporate Financial Distress: Reflections on Choice-Based Sample Bias. Journal of Economics and Finance, 26(2), 184–199.
Purnamasari, D., Siswoyo, S., & Wahyudin, R. (2024). Pengukuran Financial Distress Menggunakan Metode Altman Z-Score Dan Springate S-Score Pada Company Food and Beverage Yang Terdaftar Di Bursa Efek Indonesia. Brainy: Jurnal Riset Mahasiswa, 5(2), 73–82.
Qathrunnada, N., Ahmad, G. N., Yusuf, H. M., & Desmawan, D. (2024). The Effect of Leverage, Total Assets Turnover, and Profitability on Financial Distress in Food and Beverage Subsector Companies on the IDX. International Journal Of Education, Social Studies, And Management (IJESSM), 4(2), 321–333.
Ramadhaniyah, R., & Triana, A. (2022). Pengaruh Financial Indicators dan Efektivitas Komite Audit Terhadap Kondisi Financial Distress (Studi Empiris Pada Company Manufaktur yang Terdaftar di Bursa Efek Indonesia Periode 2019–2020).
ReportLinker. (2024). Forecast: Food and Beverage Revenue in Malaysia.
Salleh, S. M. (2020). Audit Committee Attributes and Financial Distress: A Case of Malaysian PN17 Companies. European Proceedings of Social and Behavioural Sciences, 131–138.
Schumpeter, J. A., & Keynes, J. M. (1936). The General Theory of Employment, Interest and Money. Journal of the American Statistical Association, 31(196), 791.
Star, T. (2026). Khee San inches closer to PN17 exit. The Star.
Sugiyono. (2018). Metode Penelitian Bisnis (3rd ed.). Alfabeta.
Utami, B., Mujiyani, & Kustyarini, E. (2025). Analisis Financial Distress Dengan Menggunakan Metode Altman Z-Score dan Springate S-Score. Journal Reference, 6(2), 1–9.
Wati, N. S., & Januarti, I. (2025). The role of corporate governance and leverage on financial distress. Jurnal Akuntansi Aktual, 8(3), 446–457.
Widyadari, S., Herawati, R., Sumaryati, A., & Andika, A. D. (2026). Analisis Risiko Financial Distress Ditinjau dari Likuiditas, Profitabilitas, dan Leverage Company Subsektor Food and Beverage. 14(1), 101–112.
Williams, J., & Voas, J. (2021). Outlook 2021. Computer, 54(1).
Yeri Herliza, Enggar Diah Puspa Arum, & Ratih Kusumastuti. (2025). Analysis of the Influence of Audit Committee Characteristics, Managerial Ownership on Financial Distress (Research on Property and Real Estate Sector Companies Listed on the Indonesia Stock Exchange in 2021-2023). International Journal of Asian Business and Management, 4(3), 807–824.
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 ACCRUALS (Accounting Research Journal of Sutaatmadja)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Program Studi Akuntansi