Guarding against financial distress: The power of institutional ownership in Indonesia’s insurance firms

Type of the article: Research ArticleAbstractThis study aims to analyze the influence of financial performance, consisting of solvency, profitability, and liquidity, on financial distress moderated by good corporate governance (institutional ownership). The study was conducted at Indonesian joint venture insurance companies. This study used a quantitative method. The population in the study is joint venture insurance companies in Indonesia registered with the Financial Services Authority. The sample in this study amounted to five (5) joint venture insurance companies selected using purposive sampling. The data used are secondary data from the company’s annual financial statements for the period 2019 to 2023. The data were processed using the EViews 13 application to illustrate the relationship between independent, dependent, and moderating variables. The results of the study show that solvency and profitability have a significant negative effect on the financial distress of joint venture insurance companies in Indonesia Liquidity does not affect the financial distress of joint venture insurance companies in Indonesia. Institutional ownership as a moderating variable can strengthen the influence of solvency on financial distress, but it weakens the influence of profitability and liquidity on financial distress. This study offers original value by examining the moderating role of institutional ownership as a proxy for good corporate governance in the relationship between financial performance and financial distress.