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Corporate bankruptcy: Evidence from the plastics and packaging industry in Indonesia

Author

Listed:
  • Adita Nafisa

    (Faculty of Economics and Bussines Universitas Islam Raden Rahmat)

  • Helmi Muhammad

    (Faculty of Economics and Bussines Universitas Islam Raden Rahmat)

  • Niki Puspita Sari

    (Faculty of Economics and Bussines Universitas Islam Raden Rahmat)

Abstract

This study analyzes the bankruptcies of companies in the plastic and packaging industry listed on the Indonesian stock exchange. This analysis is essential to know the condition of the company's performance and in what position. The hope is to assist stakeholders in making the best decisions for sustainability. The positive contribution of the plastics and packaging industry in supporting economic growth in Indonesia, as well as the challenges of global issues regarding the negative impact of use, requires companies to avoid financial distress or bankruptcy. However, recent research argues that very few company managers try hard to avoid the risk of bankruptcy. This quantitative descriptive research takes a sample of 10 companies selected purposively with predetermined criteria. Following the arguments of Altman (1983), the research analysis uses the Altman Z-Score for a sample of firms in one homogeneous industry. The results showed that, in general, the plastic and packaging industry was potentially vulnerable and had financial distress or went bankrupt, and there was only one healthy company. The results of this study also have an essential contribution for stakeholders to detect early on the company's financial condition and help make sound managerial decisions. Key Words:Corporate Bankruptcy, Plastic and Packaging Industry, Indonesia Stock Exchange

Suggested Citation

  • Adita Nafisa & Helmi Muhammad & Niki Puspita Sari, 2022. "Corporate bankruptcy: Evidence from the plastics and packaging industry in Indonesia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(6), pages 165-174, September.
    • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:6:p:165-174
    DOI: 10.20525/ijrbs.v11i6.1942
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    References listed on IDEAS

    as
    1. Grice, John Stephen & Ingram, Robert W., 2001. "Tests of the generalizability of Altman's bankruptcy prediction model," Journal of Business Research, Elsevier, vol. 54(1), pages 53-61, October.
    2. Edward I. Altman & Brooks Brady & Andrea Resti & Andrea Sironi, 2005. "The Link between Default and Recovery Rates: Theory, Empirical Evidence, and Implications," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2203-2228, November.
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