Bankruptcy Prediction Model Under Uncertainty in Indonesia

This paper assesses three issues in predicting of the bankruptcy under uncertainty in the COVID-19 pandemic within the Textile and Garment companies listing in the IDX Stock Exchange. First, it determines the industry characteristics that categorizes potential to bankrupt or non-bankrupt. Second, it identifies predictors as the benchmark model’s that can indicate a company's potential to bankrupt. Third, it assesses the bankruptcy prediction panels are more significant than the benchmark model’s that concerning the financial ratios, firm characteristics, and macroeconomic. Using the panel data for five years within eighteen companies, we found the financial ratios of the listed companies within asymmetric distribution. Overall, the firm characteristics during those periods did not differ but were dominated by the companies that had potential to bankrupt compared to those that were non-bankrupt. The cumulative liquidity and profitability ratios become more potential to reduce probabilities of company categorized bankrupt. However, the profitability and solvability ratios have an effect size on propensity of the listed companies to determine whether they are potential to bankrupt than non-bankrupt. The COVID-19 pandemic as an uncertainty period contributes to increasing the accuracy of predicting the probability of companies that are potentially bankrupt or other types of failures.