Is the Bankruption Threat Affecting the Company Stock Returns?

Kennedy, Posma Sariguna Johnson and Andhika, Yafet and Tobing, Suzanna Josephine L. and Tampubolon, Emma and Lumbantoruan, Rutman (2019) Is the Bankruption Threat Affecting the Company Stock Returns? International Research Journal of Nature Science and Technology (IRJNST), 1 (4). pp. 27-31. ISSN 2581 9038

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Abstract

This study aims to examine the projection of the bankruptcy of textile and garment companies andinvestigate whether there is an effect of the potential bankruptcy of the company on stock returns. The sample inthis study were textile and garment companies that went public on the Indonesia Stock Exchange (IDX) in theperiod 2010 to 2014, where 16 companies met the criteria. The data used is taken from the general descriptionof the company or company profile, the company's financial statements including the balance sheet and incomestatement. The dependent variable in this study is stock returns, while the independent variable is the AltmanScore. Data analysis methods are Altman Z-Score ratio analysis and regression analysis. From the calculationof the financial ratio of Altman Z-Score from 2010 to 2014, most textile and garment companies on the IDXhave the potential for bankruptcy. From the regression results, it was concluded that stock returns were notaffected by the potential value of bankruptcy. However, management needs to be careful in managing andrunning the company's operations by continuing to improve the company's performance so as not to disrupt thecontinuity of its business. Investors must always be careful when buying company shares by always looking atthe condition of the company's fundamentals.

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