Risk Management Financial Distress Prediction and Earnings Management in Indonesian Banks
DOI:
https://doi.org/10.33050/atm.v10i3.2655Keywords:
Risk Management, Financial Distress, Earnings Management, Operational Risk, Commercial BanksAbstract
The risks faced by financial institutions, particularly banks, can influence financial performance, institutional stability, and managerial reporting behavior. As financial intermediaries and key institutions supporting economic growth, banks require effective risk management to maintain financial resilience. This study aims to examine the relationship between bank risk management, financial distress prediction, and earnings management practices in commercial banks listed on the Indonesia Stock Exchange. The study covers the 2019–2022 period, including pre-pandemic conditions, the COVID-19 disruption, and the early recovery phase. Using a quantitative approach with panel data regression analysis supported by EViews software, this study analyzes 27 commercial banks selected through purposive sampling based on complete annual report data. Bank risk management is represented by credit risk, market risk, liquidity risk, and operational risk, while financial distress and earnings management are measured using established financial models. The results show that credit risk does not significantly affect financial distress or earnings management. Market risk significantly affects earnings management but does not influence financial distress. Liquidity risk and operational risk significantly affect both financial distress and earnings management, while financial distress significantly influences earnings management. These findings highlight that liquidity and operational efficiency are important indicators for banking risk control, early warning systems, and transparent financial governance in Indonesian listed banks.
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