Jakman

Article Details

Vol. 7 No. 4 (2026): September

Articles

Financial and Non-Financial Determinants of Stock Price and Insolvency Risk in Indonesia

T Tita Deitiana A Andriati Fitriningrum D Dave Octavius
03 September 2026 Vol. 7 No. 4 (2026): September https://doi.org/10.35912/jakman.v7.n4.p315-333.2026
Abstract
03 Sep 2026

Purpose: This study investigates the effects of financial ratios and non-financial firm characteristics on stock prices and insolvency risk among Indonesian non-financial firms during 2017–2024.
Research Methodology: A quantitative approach was employed using multiple linear regression to examine the determinants of stock prices and binary logistic regression to evaluate the effects of financial and non-financial variables on insolvency risk.
Results: The findings reveal that profitability, leverage, number of employees, and number of shareholders significantly influence stock prices, indicating that investors consider both financial performance and firm characteristics in market valuation. Insolvency risk is primarily affected by liquidity and inventory turnover, while other variables show limited explanatory power. Stock price does not significantly affect insolvency risk, suggesting that market valuation does not effectively capture early signals of financial distress in Indonesia’s emerging market context.
Conclusion: This study concludes that stock price is not a reliable early-warning indicator of insolvency risk. Effective liquidity management and operational efficiency are essential for reducing financial distress and strengthening firm resilience.
Limitations: The study focuses only on non-financial firms and does not incorporate macroeconomic shocks or dynamic non-linear models. Future research should consider broader contexts and external uncertainty factors.
Contribution: This study contributes to corporate finance literature by highlighting the importance of financial and non-financial signals in predicting insolvency risk. The findings support the development of early warning systems that prioritize solvency and operational indicators over market volatility.

Keywords: Emerging Market Financial Ratio Insolvency Risk Stock Price
How to Cite
“
Deitiana, T., Fitriningrum, A., & Octavius, D. (2026). Financial and Non-Financial Determinants of Stock Price and Insolvency Risk in Indonesia. Jurnal Akuntansi, Keuangan, Dan Manajemen, 7(4), 315–333. https://doi.org/10.35912/jakman.v7.n4.p315-333.2026
Endnote/Zotero/Mendeley (RIS) BibTeX
References
  1. Aktas, N., Croci, E.,& Petmezas, D. (2015). Is working capital management value-enhancing? Evidence from firm performance and investments. Journal of Corporate Finance, 30(1), 98-113. https://doi.org/10.1016/J.JCORPFIN.2014.12.008
  2. Almamy, J., Aston, J., & Ngwa, L. N. (2016). An evaluation of Altman’s Z-score using cash flow ratio to predict corporate failure amid the recent financial crisis: Evidence from the UK. Journal of Corporate Finance, 36, 278–285. https://doi.org/10.1016/j.jcorpfin.2015.12.009
  3. Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The Journal of Finance, 23(4), 589-609. https://doi.org/10.2307/2978933
  4. Amankwah-Amoah, J., Khan, Z., Wood, G., & Knight, G. (2021). COVID-19 and digitalization: The great acceleration. Journal of Business Research, 136, 602–611. https://doi.org/10.1016/j.jbusres.2021.08.011
  5. Bank, M., & Insam, F. (2021). Corporate aging and changes in the pricing of stock characteristics. Finance Research Letters, 42, Article 101908. https://doi.org/10.1016/j.frl.2020.101908
  6. Benjamin, S. J., Mohamed, Z. bin, & Marathamuthu, M. S. (2018). DuPont analysis and dividend policy: Empirical evidence from Malaysia. Pacific Accounting Review, 30(1), 52-72. https://doi.org/10.1108/PAR-05-2015-0019
  7. Berggrun, L., Cardona, E., & Lizarzaburu, E. (2020). Firm profitability and expected stock returns: Evidence from Latin America. Research in International Business and Finance, 51, Article 101119. https://doi.org/10.1016/j.ribaf.2019.101119
  8. Bian, J., Chan, K., & Fong, W. M. (2020). Investor participation and the volatility-volume relation: Evidence from an emerging market. Emerging Markets Review, 45, Article 100741. https://doi.org/10.1016/j.ememar.2020.100741
  9. Cathcart, L., Dufour, A., Rossi, L., & Varotto, S. (2020). The differential impact of leverage on the default risk of small and large firms. Journal of Corporate Finance, 60, Article 101541. https://doi.org/10.1016/j.jcorpfin.2019.101541
  10. Chang, C. C., & Yang, H. (2022). The role of cash holdings during financial crises. Pacific-Basin Finance Journal, 72, Article 101733. https://doi.org/10.1016/j.pacfin.2022.101733
  11. Chen, P., & Zhang, G. (2007). How do accounting variables explain stock price movements? Theory and evidence. Journal of Accounting and Economics, 43(2–3), 219–244. https://doi.org/10.1016/j.jacceco.2007.01.001
  12. Chen, W. D., Chen, Y., & Huang, S. C. (2021). Liquidity risk and bank performance during financial crises. Journal of Financial Stability, 56, Article 100906. https://doi.org/10.1016/j.jfs.2021.100906
  13. Cheng, X., Zheng, Y., & Tu, Y. (2025). Research on the dynamic interaction effects of litigation events, financing constraints, and the risk of corporate stock price crashes. International Review of Economics & Finance, 99, Article 104008. https://doi.org/10.1016/j.iref.2025.104008
  14. Daily, C. M., & Dalton, D. R. (1994). Bankruptcy and Corporate Governance: The Impact of Board Composition and Structure Author(s). In Source: The Academy of Management Journal (Vol. 37, Number 6).
  15. Dainelli, F., Bini, L., & Giunta, F. (2013). Signaling strategies in annual reports: Evidence from the disclosure of performance indicators (Report No. 29).
  16. Dodd, O., & Liao, S. (2025). The role of inventory in firm resilience to the Covid-19 pandemic. European Financial Management, 31(2), 786-818. https://doi.org/10.1111/eufm.12517
  17. Erragragui, E., Peillex, J., Benlemlih, M., & Bitar, M. (2023). Stock market reactions to corporate misconduct: The moderating role of legal origin. Economic Modelling, 121, 106197. https://doi.org/10.1016/J.ECONMOD.2023.106197
  18. Eshghi, K., & Astvansh, V. (2024). Stock investors’ reaction to layoff announcements: A meta-analysis. Human Resource Management Journal, 34(3), 792-809. https://doi.org/10.1111/1748-8583.12532
  19. Finaldi Russo, Paolo and Parlapiano, Fabio and Pianeselli, Daniele and Supino, Ilaria, Fir Ortmann, R., Pelster, M., & Wengerek, S. T. (2020). COVID-19 and investor behavior. https://doi.org/10.1016/j.frl.2020.101717
  20. Firmansyah, D., Suryana, A., Susetyo, D., & Mandasari, R. (2021). Kontribusi Perputaran Kas dan Perputaran Piutang terhadap Profitabilitas pada PD BPR Kota Sukabumi Periode Tahun 2011 2017. Jurnal Akuntansi, Keuangan, dan Manajemen, 2(2), 151-163. https://doi.org/10.35912/jakman.v2i2.155
  21. Fusco, F., & Migliaccio, G. (2018). Crisis, sectoral and geographical factors: Financial dynamics of Italian cooperatives. EuroMed Journal of Business, 13(2), 130-148. https://doi.org/10.1108/EMJB-02-2016-0002
  22. Ganesh, S. (2010). Multivariate linear regression. In P. Peterson, E. Baker, & B. McGaw (Eds.), In P. Peterson, E. Baker, & B. McGaw (Eds.), International Encyclopedia of Education (3rd ed., pp. 324–331). Elsevier.
  23. Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.).
  24. Han, M., Wu, J., Wang, Y., & Hong, M. (2018). A model and empirical study on the user’s continuance intention in online China brand communities based on customer-perceived benefits. Journal of Open Innovation: Technology, Market, and Complexity, 4(4). https://doi.org/10.3390/joitmc4040046
  25. Hill, J. (2020). Theory of the firm. In Environmental, Social, and Governance (ESG) Investing (pp. 29–44). Academic Press. https://doi.org/10.1016/B978-0-12-818692-3.00003-7
  26. Hilmola, O. P. (2020). Role of inventory and assets in shareholder value creation. Expert Systems with Applications: X, 5, Article 100027. https://doi.org/10.1016/j.eswax.2020.100027
  27. Hosmer, D. W., Lemeshow, S., & Sturdivant, R. X. (2013). Applied logistic regression (3rd ed.).
  28. Kieschnick, R., & Moussawi, R. (2018). Firm age, corporate governance, and capital structure choices. Journal of Corporate Finance, 48, 597–614. https://doi.org/10.1016/j.jcorpfin.2017.12.011
  29. Kim, H. Y. (2019). Statistical notes for clinical researchers: Simple linear regression 3 – residual analysis. Restorative Dentistry & Endodontics, 44(1). https://doi.org/10.5395/rde.2019.44.e11
  30. Kraus, A., & Litzenberger, R. H. (1973). A state-preference model of optimal financial leverage. The Journal of Finance, 28(4), 911-922. https://doi.org/10.2307/2978343
  31. Kumar, R., Pandey, D. K., & Goodell, J. W. (2023). Market reactions to layoff announcements during crises: Examining impacts and conditioners. Finance Research Letters, 58, Article 104423. https://doi.org/10.1016/j.frl.2023.104423
  32. Laksmiati Mia,et all. (2026). Peran financial distress Altman memediasi kinerja keuangan terhadap harga saham pada BUMNdi BEI(The role of financial distress Altman in mediating financial performance towards share prices in State-Owned Entreprises on the IDX). Jurnal Akuntansi,Keuangan,dan Manajemen (Jakman) ISSN:2716-0807, Vol2, No 1, 2020, 27-40. https://doi.org/10.35912/jakman.v2i1.125
  33. Leary, M. T., & Roberts, M. R. (2010a). The pecking order, debt capacity, and information asymmetry. Journal of Financial Economics, 95(3), 332-355. https://doi.org/10.1016/J.JFINECO.2009.10.009
  34. Linneman, T. J. (2021). Social statistics: Managing data, conducting analyses, presenting results (4th ed.).
  35. Lo, H. C., Koedijk, K. G., Gao, X., & Hsu, Y. T. (2020). How do job vacancy rates predict firm performance? A web crawling massive data perspective. Pacific-Basin Finance Journal, 62, Article 101371. https://doi.org/10.1016/j.pacfin.2020.101371
  36. Mensah, L., Bein, M. A., & Arhinful, R. (2025). The impact of capital structure on business growth under IFRS adoption: Evidence from firms listed in the Frankfurt Stock Exchange. SAGE Open, 15(2). https://doi.org/10.1177/21582440251336533
  37. Mermer, O., & Demir, I. (2025). Multivariate regression analysis for identifying key drivers of harmful algal bloom in Lake Erie. Applied Sciences, 15(9). https://doi.org/10.3390/app15094824
  38. Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261-297.
  39. Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221. https://doi.org/10.1016/0304-405X(84)90023-0
  40. Navarro-Galera, A., Gómez-Miranda, M. E., Lara-Rubio, J., & Buendía-Carrillo, D. (2024). Empirical research to identify early warning indicators of insolvency in small and medium-sized enterprises (SMEs). Revista de Contabilidad-Spanish Accounting Review, 27(2), 344–356.
  41. Nukala, V. B., & Prasada Rao, S. S. (2021). Role of debt-to-equity ratio in project investment valuation, assessing risk and return in capital markets. Future Business Journal, 7(1). https://doi.org/10.1186/s43093-021-00058-9
  42. Oktariyani, Amanda. (2019). Analisis pengaruh current ratio, der, tato dan ebitda terhadap kondisi financial distress pada perusahaan manufaktur yang terdaftar dibursa efek Indonesia. Jurnal Akuntansi dan Manajemen, 14(1), 11-15. https://doi.org/10.24843/JIAB.2019.v14.i01
  43. Ortmann, R., Pelster, M., & Wengerek, S. T. (2020). COVID-19 and investor behavior. Finance Research Letters, 37. https://doi.org/10.1016/j.frl.2020.101717
  44. Saha, A., Bose, S., & Lobo, G. J. (2025). Does commitment to operational sustainability pay off? International evidence. The British Accounting Review, Article 101782. https://doi.org/10.1016/j.bar.2025.101782
  45. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355-374. https://doi.org/10.2307/1882010
  46. Sunardi, S., Noviolla, C., Supramono, S., & Hermanto, Y. B. (2023). Stock market reaction to government policy on determining coal selling price. Heliyon, 9(2). https://doi.org/10.1016/j.heliyon.2023.e13454
  47. Surya Alam, D., et al. (2026). The Zmijewski model as an early indicator of financial distress in retail companies listed on the Indonesia Stock Exchange. Studi Ilmu Manajemen dan Organisasi, 6(4), 205-220. https://doi.org/10.35912/simo.v6i4.4975
  48. Vătavu, S. (2015). The impact of capital structure on financial performance in Romanian listed companies. Procedia Economics and Finance, 32, 1314–1322. https://doi.org/10.1016/S2212-5671(15)01508-7
  49. Weidman, S. M., McFarland, D. J., Meric, G., & Meric, I. (2019). Determinants of return-on-equity in USA, German and Japanese manufacturing firms. Managerial Finance, 45(3), 445-451. https://doi.org/10.1108/MF-07-2018-0305
  50. Yeh, C. M. (2021). The signaling roles of ownership and board structure for foreign institutional investors in the tourism industry. Journal of Hospitality and Tourism Management, 49, 161–171. https://doi.org/10.1016/j.jhtm.2021.08.026
  51. Yıldırım, D., & Çelik, A. K. (2021). Testing the pecking order theory of capital structure: Evidence from Turkey using panel quantile regression approach. Borsa Istanbul Review, 21(4), 317-331. https://doi.org/10.1016/j.bir.2020.11.002
  52. Zhao, C., Yuan, X., Long, J., Jin, L., & Guan, B. (2023). Financial indicators analysis using machine learning: Evidence from Chinese stock market. Finance Research Letters, 58, Article 104590. https://doi.org/10.1016/j.frl.2023.104590
  53. Zutter, C. J., & Smart, S. B. (2019). Principles of managerial finance (15th ed.).
License & Copyright
Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.