ANAYSIS OF FACTORS INFLUENCING FINANCIAL DISTRESS

Abstract

This study aims to identify and analyze the factors influencing financial distress by employing a Systematic Literature Review (SLR) approach. The research was conducted through an extensive search of academic articles on Google Scholar, which initially yielded approximately 39,400 results. The data were then filtered using the Publish or Perish (PoP) software, narrowing the selection to 200 relevant articles. Further screening based on SINTA index classification and citation relevance resulted in 10 eligible journal articles published between 2020 and 2025, which were subsequently analyzed in depth. The findings of this review reveal that financial distress is influenced by a combination of internal financial factors, including liquidity, leverage, profitability, firm size, and cash flow (Wijaya & Suhendah, 2023; Hidayat et al., 2024), as well as governance-related determinants, such as audit committee effectiveness, institutional ownership, and corporate transparency (Putri & Aminah, 2019; Komala & Triyani, 2019). In addition, external factors—such as market fluctuations and macroeconomic shocks like the COVID-19 pandemic—also play a significant role in determining corporate financial stability (Sari & Setyaningsih, 2022; Wahyuningsih & Aminah, 2019). These results demonstrate that financial distress is a multidimensional phenomenon, shaped by the interaction of financial performance, management behavior, and environmental conditions. Firms with strong financial governance, optimal debt control, and adaptive liquidity management are better positioned to prevent distress and maintain operational sustainability