International Journal of Application on Economics and Business
Vol. 2 No. 3 (2024): Agustus 2024

THE INFLUENCE OF PROFITABILITY, LIQUIDITY, AND LEVERAGE ON FINANCIAL DISTRESS IN GENERAL INSURANCE COMPANIES DURING THE COVID-19 PANDEMIC

Mihelle Mihelle (Faculty of Economics and Business, Universitas Tarumanagara, Jakarta, Indonesia)
Hendro Lukman (Faculty of Economics and Business, Universitas Tarumanagara, Jakarta, Indonesia)



Article Info

Publish Date
10 Aug 2024

Abstract

During the COVID-19 pandemic, it was an extraordinary event that occurred unexpectedly and unanticipated by all countries. Easy transmission through saliva droplets has caused many countries to implement community lockdown policies. This condition causes a decline in economic activity coupled with a lot of public spending on health. Many companies have reduced their activities and even closed their businesses temporarily or permanently. This condition has an impact on reducing premium income from general insurance companies. This research aims to analyze the effect of profitability, liquidity and leverage on financial distress in general insurance companies listed on the Indonesia Stock Exchange (BEI) during the COVID-19 pandemic. This research uses 24 data from 8 general insurance companies selected using a non-purposive sampling method. This research uses multiple regression analysis. The results of this research show that profitability and liquidity have a positive effect on financial distress during the COVID-19 pandemic. Meanwhile, leverage shows that it has no effect on financial distress. This research provides a positive signal for investors who want to invest in general insurance companies. The implications of this research provide a signal that companies must manage the use of profits to maintain adequate liquidity, and by carefully managing debt, companies can avoid financial distress.

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Journal Info

Abbrev

ijaeb

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Social Sciences

Description

International Journal of Application on Economics and Business (IJAEB) contains articles on the following topics: Entrepreneurship studies, Business studies, Management studies, Accounting studies, Economics ...