BANKRUPTCY AND FINANCIAL FRAUDULENT ANALYSIS OF AUTOMOTIVE AND AUTOMOTIVE COMPONENT SUB-SECTOR LISTED ON INDONESIA STOCK EXCHANGE FOR THE PERIOD OF 2018 – 2022

• Main Author: Ayu Wulandari, Putri
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/79181
• Institution: Institut Teknologi Bandung

In Indonesia, the automotive sector is considered to provide a multiplier effect for national economic growth since it links to global supply chains and a high number of employment. Previously, the transportation equipment industry had very potential for its growth. However as the economic condition was unstable, one of which was caused by the emergence of Covid - 19 pandemic, the performance of the company in the automotive and automotive components sub-sector was also showing slowing performance. The difficult financial condition can lead the company to bankruptcy. Previous research states that bankruptcy will have various negative impacts both for the company and for other stakeholders. Under non-ideal conditions, the difficult financial condition can also lead to the emergence of financial fraud. Considering those conditions, the author conducted this study. The purpose of this study is to examine the prediction of bankruptcy risk and financial fraud in the automotive sector. The study focuses on eight publicly-listed firms in the automotive and automotive component sub-sector listed in the Indonesia Stock Exchange (IDX) from 2018 to 2022. The bankruptcy risk prediction was calculated by the Altman Z-Score model using five indicators which measure liquidity, profitability, leverage, and revenue-generating ability. The financial fraudulent analysis was calculated by Beneish M-Score using eight indicators which measure gross margin, asset quality, depreciation, leverage, and sales. The result of this study indicates that on average in the year 2018 – 2022, some automotive and automotive component sub-sector companies listed in the Indonesia Stock Exchange (IDX) indicated in a safe zone were PT Selamat Sempurna Tbk, PT Multi Prima Sejahtera Tbk, PT Indo Kordsa Tbk, and PT Multistrada Arah Sarana Tbk. The companies in the grey zone were PT Astra Otoparts Tbk. Other than that, other companies in the automotive and automotive sub-sector resulted in a distress zone, they were PT Prima Alloy Steel Tbk, PT Goodyear Tbk, and PT Gajah Tunggal Tbk. But overall on average from the year 2018 to 2022, the automotive and automotive subsector companies were classified in safe zone. The value of the Beneish M-score on average by the company within the year 2018 – 2022 shows that there is one company that indicated having financial fraud which is PT Multi Prima Sejahtera. But the value of the Beneish Mscore in the period 2018– 2021 on average shows that the majority of the companies in the automotive and automotive components sub-sector were classified as having no fraud identification for their financial report. It is suggested that company management should continue to pay attention to changes that occur in each component in the financial statements, such as increases and decreases that occur in assets, retained earnings, liabilities, earnings before interest and taxes, and other components. Knowing information about company bankruptcy can help companies avoid company bankruptcy by making improvements early on. Assessing the possibility of financial fraud can also be a method for a company to identify fraudulent acts in their operation by evaluating the company's financial performance. The study's findings, which will examine at the likelihood of bankruptcy and financial fraud within the company, are anticipated to give investors important data with which to evaluate and decide which businesses to invest in.