Comparative Study of Financial Distress and Governance Effects on Indonesian Pharmaceutical Performance with Political Visibility

David Kurniawan; Ingrid Panjaitan

doi:10.37058/jak.v21i1.672

Authors

David Kurniawan Instiut Teknologi dan Bisnis Kristen Bukit Pengharapan
Ingrid Panjaitan Instiut Teknologi dan Bisnis Kristen Bukit Pengharapan

DOI:

https://doi.org/10.37058/jak.v21i1.672

Keywords:

Financial Distress, Financial Performance, Good Corporate Governance, Pharmaceutical Companies, Political Visibility

Abstract

The Indonesian pharmaceutical subsector experienced significant structural and regulatory shifts during the COVID-19 crisis and subsequent recovery period. This study examines the effects of financial distress and good corporate governance (GCG) on financial performance, while testing the moderating role of political visibility across the pandemic (2020–2022) and post-pandemic (2023–2024) periods. Using a quantitative approach, secondary data from ten pharmaceutical firms listed on the Indonesia Stock Exchange were analyzed through multiple linear regression and Moderated Regression Analysis (MRA). Financial distress was measured using the Altman Z-Score, governance quality through board structure indicators, political visibility by firm size (natural logarithm of total assets), and financial performance by Tobin’s Q. The results indicate that financial distress and GCG do not significantly affect financial performance in either period. Political visibility neither exerts a direct effect nor significantly moderates the relationships between financial distress, governance quality, and firm value. These findings suggest that in highly regulated and politically sensitive industries, market valuation is more strongly influenced by macroeconomic and regulatory dynamics than by firm-level financial and governance mechanisms. Theoretically, this study highlights the contextual limitations of traditional financial distress and governance theories in emerging market settings characterized by institutional intervention. Practically, the findings imply that managers and investors should consider broader policy and regulatory environments when evaluating firm value during systemic crises and recovery phases.

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