PENGARUH EXPENSE RETRENCHMENT, ASSET RETRENCHMENT, DAN LEVERAGE TERHADAP KEBERHASILAN CORPORATE TURNAROUND PADA PERUSAHAAN YANG MENGALAMI FINANCIAL DISTRESS

Nidya Zati Hanani, NIM.: 21108040022 (2025) PENGARUH EXPENSE RETRENCHMENT, ASSET RETRENCHMENT, DAN LEVERAGE TERHADAP KEBERHASILAN CORPORATE TURNAROUND PADA PERUSAHAAN YANG MENGALAMI FINANCIAL DISTRESS. Skripsi thesis, UIN SUNAN KALIJAGA YOGYAKARTA.

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Abstract

Financial distress poses a serious threat to business continuity, particularly for non-financial sector companies that were significantly impacted during the post-Covid-19 pandemic period. In response to such conditions, companies are required to implement corporate turnaround strategies to restore performance and avoid potential bankruptcy. These strategies may involve cost efficiency (expense retrenchment), reduction of unproductive assets (asset retrenchment), and capital structure management as reflected through leverage. This study aims to analyze the effect of expense retrenchment, asset retrenchment, and leverage on the success of corporate turnaround in non-financial sector companies experiencing financial distress and listed on the Indonesia Stock Exchange during the period 2018–2023. The sample was selected using a purposive sampling method, resulting in 69 companies with 414 observations that met the financial distress criteria based on the Altman Z''-Score model. Data were analyzed using probit regression with the aid of STATA 17 software. The findings show that asset retrenchment has a positive effect on the success of corporate turnaround, while leverage has a negative effect. Meanwhile, expense retrenchment does not show a significant influence. These results suggest that divesting unproductive assets and managing capital structure play an important role in the recovery process, whereas cost-cutting strategies may not always be effective. The study also includes firm size as a control variabel, revealing that larger firms tend to have a lower likelihood of recovering from financial distress, as indicated by the negative effect on corporate turnaround success.

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