Financial Distress State-Owned Enterprises (BUMN KARYA) on the Indonesia Stock Exchange Based on Firm Size, Debt Ratio, and Interest Burden for the 2019-2025 Period: An Islamic Business Ethics Perspective

Syaifuddin Halim

Abstract


This study aims to analyze the influence of Firm Size, Debt Ratio, and Interest Burden on Altman Z-Score as a proxy for Financial Distress in four state-owned construction sub-sector companies listed on the Indonesia Stock Exchange, namely PT Adhi Karya (Persero) Tbk, PT Pembangunan Perumahan (Persero) Tbk, PT Wijaya Karya (Persero) Tbk, and PT Waskita Karya (Persero) Tbk, for the period 2019 to 2025.  The study uses a causal associative quantitative approach with a panel data regression method.  The selection of the best model through the Chow Test and the Lagrange Multiplier Test produces the Common Effect Model (CEM) as the final model; the Panel Period LR Test heteroscedasticity test detects heteroscedasticity (LR = 197. 4053; p = 0. 0000), but the inference is still based on the CEM estimate without weighting that has been confirmed to be consistent.  The results of the study indicate that: (1) Firm Size has no significant effect on Altman Z-Score (coefficient -0. 1007; p = 0. 8101), H1 is rejected; (2) Debt Ratio has a negative and very significant effect on Altman Z-Score (coefficient -14. 5151; p = 0. 0000), H2 is accepted; (3) Interest Burden has no significant effect on Altman Z-Score (coefficient 1. 1555; p = 0. 9009), H3 is rejected; (4) simultaneously, the three variables have a significant effect with an F-statistic of 18. 36732 (p = 0. 000002) and an Adjusted R-squared of 0. 6587, H4 is accepted.  Viewed from the perspective of Islamic Business Ethics, the Financial Distress condition of BUMN Karya reflects the need to strengthen the application of the principles of tawazun (balance) and amanah (responsibility) in managing public capital.  This research confirms that improving the Debt Ratio is a fundamental prerequisite before the BUMN Karya merger is executed.


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References


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