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March 12, 2026Open Access

Strengthening Risk Management and Corporate Governance to Prevent Financial Distress and Enhance Business Sustainability

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Authors

FRFitriana RosaUniversitas WidyatamaLRLizwaril RudyUniversitas WidyatamaHDHerawati Shinta DewiUniversitas Widyatama

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Implication

Demonstrates the impact of risk management and governance on financial distress in Indonesian manufacturing, suggesting implications for business sustainability.

Key Points

  • This research aims to investigate the effects of enterprise risk management disclosure and corporate governance on financial distress and sustainability performance.
  • Analyzed panel data from 65 manufacturing firms on the Indonesia Stock Exchange from 2021 to 2024.
  • Utilized Structural Equation Modeling–Partial Least Squares (SEM-PLS) for testing relationships among variables.
  • Measured financial distress using the Altman Z-Score model.
  • Proxied sustainability performance with a Sustainability Disclosure Index based on GRI Standards.
  • Both enterprise risk management disclosure and corporate governance significantly lower financial distress.
  • Financial distress has a negative impact on sustainability performance.
  • Financial distress partially mediates the relationship between risk management, governance, and sustainability performance.

Cite This Study

Rosa et al. (2026) studied this question.

synapsesocial.com/papers/69b25adb96eeacc4fcec8f6ehttps://doi.org/10.5281/zenodo.18934412
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1Financial Ratios and Corporate Governance as Determinants of Financial Distress Probability: Evidence from Indonesian Manufacturing Firms2026
  2. 2Strategy to Prevent Financial Distress Through Increasing Business Efficiency, Utilizing Intellectual Capital and Implementing Good Corporate Governance2025
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  4. 4What drives Indonesian companies to engage in ESG: The non-financial corporate context2025
  5. 5The Effect of Investment Decisions, Funding Decisions, Operational Decisions on Value of the Firm through Financial Distress as Intervening and Good Corporate Governance (GCG) as Moderating2024 · 1 citations