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. The implications of this study provide a
structured synthesis of recent Indonesian research that can serve as a reference for
policymakers, investors, and academics in designing effective early warning systems
and corporate recovery strategies to mitigate financial distress.