The Indirect Costs of Financial Distress in Indonesia

The Indirect Costs of Financial Distress in Indonesia

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This paper presents quantitative estimates of the indirect cost of financial distress and its determinants.In order to measure the cost, this Looking at ships, boats and canoes…urban experiences and relationship between City and river in the Amazônia Ribeirinha A ver navios, barcos e canoas...vivências urbanas e relação cidade-Rio na Amazônia Ribeirinha study estimates the annualized changes in industry-adjusted operation profit and sales from a year before the onset of distress to the resolution year.Using those approaches, the median of indirect financial distress cost is estimated between three and 11 percent annually.

To the extent that the direct cost of financial distress reduces reported operating income, the estimated costs are overstated.The simple regressions analysis suggest that the indirect cost of financial distress significantly increases with size, leverage, number of creditors, and poor industry performance, but is Occurrence of Equatorial Plasma Bubbles during Intense Magnetic Storms not related to degree of bank loan reliance.The findings provide a weak support for the financial distress theory which suggests that conflicts of interest render the costs of financial distress.