Title:
THE ROLE OF GOOD CORPORATE GOVERNANCE IN MODERATING THE INFLUENCE OF LEVERAGE, CASH FLOW AND CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL DISTRESS IN THE FOOD AND BEVERAGE INDUSTRY ON THE INDONESIA STOCK EXCHANGE (IDX)

Authors:
Meri Khairunnisa, Said Musnadi and A Sakir, Indonesia

Abstract:
This study aims to test the CG Index as a representation of Good Corporate Governance (GCG) moderation on Debt to Asset ratio (DAR/leverage), operating cash flow, and CGRI Index as a representation of Corporate Social Responsibility (CSR) relationship with financial distress (FD) measured through the Altman Z-Score in 48 food and beverage subsector companies on the Indonesia Stock Exchange (IDX) for the 2020–2024 period. From a total population of 94 registered entities, a purposive sample was selected based on financial reporting continuity, yielding 240 observation units that served as the basis for estimation. Hypothesis testing was carried out using Moderated Regression Analysis (MRA) with an Estimated Generalized Least Squares (EGLS) approach based on Cross-Section Weights through the Eviews 13 software. The results of the estimation revealed four main findings: first, DAR was shown to contribute positively and significantly to the increased risk of FD (coefficient ?5.159; p=0.000); second, operating cash flow worked in the opposite direction by significantly reducing the probability of FD (coefficient 2.588; p=0.000); third, higher intensity of CSR disclosure was negatively and significantly correlated with FD conditions (coefficient 0.438; p=0.033); fourth, the CG Index is statistically proven to be able to weaken the transmission of leverage risk while emphasizing the negative relationship of CSR to FD, but the similarly unconfirmed moderation capacity on the cash flow path indicates that the effectiveness of governance as a risk buffer is selective and depends on the characteristics of the variables interacting with it.