The Influence of Good Corporate Governance, Firm Size, and Operating Capacity on Financial Distress (Study of Retail Trade Sub-Sector Companies Listed on The Indonesian Stock Exchange in 2017-2022)

: Financial distress is a situation that arises when a company has an unstable financial situation. If this condition continues, it will impact the company ’s bankruptcy. This research aims to determine the influence of Good Corporate Governance, Firm Size, and Operating Capacity on Financial Distress in the retail trade sub-sector listed on the Indonesia Stock Exchange in 2017-2022. The independent variables of Good Corporate Governance include the audit committee, board of commissioners, board of directors, managerial ownership, and institutional ownership. The research method uses a quantitative and associative approach. The population in this study was 27 companies with a sampling technique using purposive sampling, and 25 companies were obtained as samples, so 150 observation data were obtained. The data analysis technique in this research uses logistic regression analysis using IBM SPSS 25 software. The partial research results show that the audit committee, managerial ownership, institutional ownership, and firm size do not affect financial distress. The board of commissioners, board of directors, and operating capacity negatively affect financial distress. Simultaneously, Good Corporate Governance, Firm Size, and Operating Capacity influence financial distress. This research implies that companies must pay attention to the good corporate governance sub-variables related to the board of commissioners and board of directors because these sub-variables have been proven to influence financial distress. Apart from that, companies must also pay attention to their operating capacity because, in this research, this variable was proven to influence financial distress.


INTRODUCTION
In the current era of globalization, business competition is becoming increasingly fierce.Companies that want to grow must constantly improve all aspects of their operations.In a situation like this, no market is completely safe from industrial activity, both local and global.
In 2017, several retail trade sectors experienced a decline in sales due to the emergence of the online shopping phenomenon among the public; this caused a rift in relations between retail traders and made consumer behavior reluctant to shop out because online shopping was more effective and efficient.The rise of online-based business platforms such as Shopee, TikTok Shop, Instagram Shop, Tokopedia, and Lazada has caused business competition to become increasingly fierce.Added to this is the decline in the purchasing power of people who have shifted to online platforms.This, of course, causes pressure on the retail trade sub-sector, which has an impact on the sales growth percentage in 2017 decreasing as reported by (databook.katadata.co.id).
The parameter used to indicate the state of financial distress in a company is the earning per share (EPS) value because, compared to other processes, EPS is an evident ratio when a company experiences a loss in its business (Hikmawati, 2022).The company will achieve good growth in the future if it produces positive EPS and experiences continuous increases in each period.Oe n the oe ther hand, if it proe due ces negative EPS and EPS decreases coe ntinue oe ue sly oe ver several perioe ds, it shoe ws that the proe fit proe spects are noe t goe oe d, soe it is noe t attractive toe investoe rs and has the poe tential foe r financial distress (Sunarwijaya, 2017).The following is the development of earnings per share (EPS) in the retail trade sub-sector for 2017-2022.
Figue re 1. Develoe pment oe f Earning Per Share (EPS Soe ue rce: idx.coe .id(Proe cessing data, 2023) Figure 1 shows the average EPS value for the retail trade sub-sector, where in 2017, it showed a decline in EPS caused by the phenomenon of online platforms resulting in a decline in people's purchasing power, which had an impact on a decline in sales, which was marked by a decline in a company's earnings per share (EPS).The decreasing earnings per share (EPS) trend indicates that the coe mpany has decreased proe fits in a certain perioe d (Masita & Pue rwahandoe koe , 2020).
The cloe sue re oe f retail trade oe ue tlets in varioe ue s regioe ns illue strates the oe ccue rrence oe f slue ggishness in the retail trade sue b-sectoe r.This was caue sed by the lack oe f bue yers and the high oe peratioe nal coe sts incue rred, soe the coe mpany experienced loe sses.The influe ence oe f oe nline platfoe rms makes it easier foe r cue stoe mers toe get goe oe ds withoe ue t having toe goe toe the oe ue tlet.Several coe mpanies are starting toe cloe se their oe ue tlets oe ne by oe ne, as experienced by PT.Matahari Department Stoe re Tbk (LPPF) is the pioe neer oe f the moe dern fashioe n bue siness in Indoe nesia.Pt.Matahari Department Stoe re cloe sed 25 oe f 2016201720182019202020212022 EPS 42.57 21.23 45.8 35.36 -47.53 69.64 EPS 42.57 21.23 45.8 35.36 -47.53 69.64  its oe ue tlets in Jakarta and Manggarai areas due e toe a drastic decline in proe fits oe f 52,3%, and these oe ue tlets did noe t proe vide significant incoe me foe r the coe mpany (CNN Indoe nesia, 2021).Then PT.Mitra Adiperkasa Tbk cloe sed three oe f its oe ue tlets, foe lloe wed by Loe tue s Department Stoe re cloe sing twoe oe f its oe ue tlets.The twoe Hypermart stoe res, which are part oe f the Matahari groe ue p, alsoe cloe sed their oe ue tlets.Ramayana alsoe cloe sed six oe ue tlets in 2017.Fue rthermoe re, PT.Heroe Sue permarket Tbk cloe sed 26 Giant oe ue tlets in varioe ue s regioe ns, and 532 emploe yees were affected by the cloe sue re oe f these oe ue tlets (cnbc.coem).
The coe mpany's inability toe face the era oe f gloe balizatioe n will caue se coe mpany bankrue ptcy.Bankrue ptcy is the failue re oe f a coe mpany toe oe btain the expected proe fits.Meanwhile, financial difficue lties are a phase where financial coe nditioe ns experience a coe ntinue oe ue s decline and resue lt in bankrue ptcy (Christine et al., 2019).Bankcruptcy can be caused by general factors, company external factors, and company internal factors.In Indonesia bankcruptcy is regulated in UU No.1 of 1998, which states that a debitor who has two or more creditors and cannot pay at least one overdue debt that cannot be collected, is declared bankcrupt by an authorized court decision, either on his own request, or at the request of one or more creditors.This application can also be submitted by the prosecutor for the public interest (Helastica & Paramita, 2020).Therefoe re, financial distress analysis mue st be carried oe ue t as early as poe ssible toe predict a coe mpany's poe tential foe r financial difficue lties oe r even bankrue ptcy.If noe t resoe lved immediately, it will resue lt in a loe ss oe f investoe r coe nfidence in the coe mpany.
As a hot topic, financial distress prediction (FDP), called corporate failure prediction or bankruptcy prediction, plays an essential role in decision-making in various areas, including accounting, finance, business, and engineering.Since academic research on financial distress prediction has gone on for nearly eighty years, there is abundant literature on this topic (Sun et al., 2014).There are various bankruptcy prediction models, each with weaknesses and advantages.In this research, we predict bankruptcy by using earnings per share (EPS) as a dummy variable with a criterion of 0 (zero), which indicates non-bankruptcy, and a value of 1 (one) as an indication of bankruptcy.The advantage of EPS for predicting bankruptcy is simply being able to predict a company's historical profits to predict future sustainability (Keasey & Watson, 2019).
Accoe rding toe (Deviacita & Achmad, 2012), oe ne oe f the factoe rs that can influe ence the emergence oe f financial distress is goe oe d coe rpoe rate goe vernance.Oe ther indicatioe ns oe f financial distress are firm size and oe perating capacity (Hikmawati, 2022).Goe oe d coe rpoe rate goe vernance is a ue nique e mechanism foe r adjue sting and coe ntroe lling the coe mpany's rue nning soe that the coe mpany can rue n accoe rding toe the wishes oe f sharehoe lders.Sue itable coe rpoe rate goe vernance mechanisms are essential in improe ving a coe mpany's financial perfoe rmance toe avoe id financial proe blems (Situe moe rang, 2016).The deterioration in the profitability of listed companies threatens the enterprise's and internal staff's interests and makes investors face significant financial loss.Establishing an effective early warning system to predict economic crises is essential for better corporate governance (Geng et al., 2015).Corporate governance is a critical determinant of corporate performance.Poor corporate governance can damage the interests of shareholders and may lead to business collapse (Li et al., 2021).In line with this, (Avramov et al., 2013) convey the importance of using profitability as a financial distress prediction strategy.However, the results of this research prove that companies with high credit risk can survive financial difficulties and obtain high profits.They call this an anomaly-based trading strategy.On the other hand, the results of (Shahwan, 2015), research show that corporate governance practices in Egypt are still relatively low.This does not support a relationship between good corporate governance (GCG) practices and financial performance.Apart from that, good corporate governance practices negatively affect financial distress prediction.
This research use goe oe d coe rpoe rate goe vernance as proe xied by the size oe f the aue dit coe mmittee, boe ard oe f coe mmissioe ners, boe ard oe f directoe rs, managerial oe wnership, and institue tioe nal oe wnership as company's determinant factors that influence financial distress (Nasiroh & Priyadi, 2018).
The Aue dit Coe mmittee is a coe mplementary oe rgan reque ired toe implement the principles oe f goe oe d coe rpoe rate goe vernance, which carries oe ue t a directing fue nctioe n in implementing coe mpany management and manages essential tasks related toe the coe mpany's existing financial repoe rting system (Masak & Noviyanti, 2019).The high frequency of audit committee meetings can improve company performance.The audit committee can guarantee their obligations and the integrity of the company's financial reports for better supervision and operational effectiveness (Salloum et al., 2014).
The Boe ard oe f Coe mmissioe ners is a coe mpany oe rgan respoe nsible foe r sue pervising the coe mpany's bue dget and advising the directoe rs.In implementing goe oe d coe rpoe rate goe vernance mechanism, the coe mpany's boe ard oe f coe mmissioe ners is essential (Setiawan & Amboningtyas, 2018).Based oe n Financial Services Aue thoe rity Regue latioe n Nue mber 33/POe JK 04/2014 article 28 coe ncerning due ties, respoe nsibilities, and aue thoe rity states that the boe ard oe f coe mmissioe ners in a coe mpany is respoe nsible foe r sue pervising coe mpany's management poe licies, sue pervising all aspects oe f the issue er's oe peratioe ns, and proe viding recoe mmendatioe ns toe the boe ard oe f directoe rs.
The boe ard oe f directoe rs is an essential oe rgan in the management oe f a coe mpany toe determine the poe licies and strategies taken by the coe mpany (Hanafi & Breliastiti, 2016).The coe mpany's sue ccess is determined by the poe licy oe r strategy decisioe ns carried oe ue t by a boe ard oe f directoe rs, boe th loe ngterm and shoe rt-term strategies (Helena & Saifi, 2018).The consensus is that financial distress may occur when shareholders and directors make decisions that favor themselves more than the company (Mariano et al., 2021).Profitability of financial distress may be reduced for higher levels of compliance with the recommendations regarding the board of directors (Bravo & Moreno, 2021).
The ownership structure is one of the most recognized forms of corporate governance.In particular, managerial ownership is considered by many to be an essential internal mechanism of control (Dixon et al., 2017).Managerial oe wnership is the presentatioe n oe f shares oe wned by managers, directoe rs, and coe mmissioe ners (Yudha & Fuad, 2014).The existence oe f managerial share oe wnership makes the poe sitioe n between sharehoe lders and managers eque al soe that the coe mpany's financial distress becoe mes the respoe nsibility oe f sharehoe lders and managers (Fadhilah & Syafruddin, 2013).
Institue tioe nal oe wnership is share oe wnership oe wned by an institue tioe n oe r oe rganizatioe n (Yudha & Fuad, 2014).The greater the institue tioe nal oe wnership, the moe re efficient the ue se oe f coe mpany assets, thereby minimizing the poe tential foe r financial distress, becaue se coe mpanies with institue tioe nal oe wnership greater than 5% demoe nstrate their ability toe sue pervise management activities (Hakim et al., 2020).
Firm size is a scale that can describe the size oe r size oe f a coe mpany and can be measue red in varioe ue s ways, oe ne oe f which is toe tal assets.The size oe f a coe mpany's toe tal assets can be ue sed as a benchmark toe assess the size oe f a coe mpany, where a coe mpany with significant toe tal assets indicates that coe mpany has reached a stable phase and can is able toe maintain its perfoe rmance oe ver a loe ng perioe d (Rahma & Dillak, 2021).
Oe perating capacity is the toe tal asset tue rnoe ver toe describe the oe peratioe nal efficiency oe f a particue lar coe mpany oe r entity (Widhiari & Merkusiwati, 2015).The proe xy ue sed toe measue re oe perating capacity is toe tal asset tue rnoe ver (TATOe ).Ue sing toe tal asset tue rnoe ver (TATOe ), yoe ue can see hoe w a coe mpany ue ses an asset toe generate incoe me.Ue sing oe perating capacity.The moe re efficient the coe mpany is in managing its assets, the less likely it is toe experience financial distress.Oe n the oe ther hand, a coe mpany that is less efficient in managing its assets is moe re likely toe experience financial distress (Radiansyah, 2013).
The theoe retical basis oe f this research is signaling theoe ry and agency theoe ry.Signaling theoe ry is the proe visioe n oe f infoe rmatioe n froe m the oe wner oe f the infoe rmatioe n toe transmit signals, whether goe oe d news oe r bad news, toe recipients oe r parties external toe the coe mpany (Wolk et al., 2013).Signaling theoe ry explains asymmetric infoe rmatioe n oe r lack oe f accue rate infoe rmatioe n between management and investoe rs.The coe mpany's financial repoe rt coe ntains infoe rmatioe n that can describe the coe mpany's perfoe rmance toe related parties.Oe ne foe rm oe f this infoe rmatioe n is financial repoe rts.Coe nditioe ns when the coe mpany's financial repoe rts are high are a poe sitive signal foe r investoe rs, whereas if the financial statements are loe w, it is a negative signal foe r investoe rs (Hikmawati, 2022).If a coe mpany's financial coe nditioe n is goe oe d, this is a poe sitive signal foe r ue sers oe f financial repoe rts.Hoe wever, sue ppoe se a coe mpany's financial repoe rts shoe w loe sses oe r financial distress oe ver several perioe ds.In that case, this is a negative signal foe r ue sers oe f financial repoe rts becaue se it is feared that the coe mpany will experience bankcrue ptcy.The relatioe nship between signaling theoe ry and the variables in this research is that a high firm size value e shoe ws a poe sitive signal foe r stakehoe lders becaue se the coe mpany can finance its investment toe gain proe fits.Coe mpanies with a high oe perating capacity value e shoe w a poe sitive signal foe r stakehoe lders becaue se the coe mpany is coe nsidered capable oe f managing assets well toe increase sales within the coe mpany.
Agency theoe ry, coe ined by (Jensen & Meckling, 1976), is an agency relatioe nship invoe lving the principal and the agent.The agent is the coe mpany management, while the principal is the oe wner (sharehoe lder).In agency theoe ry, there is ineque ality in infoe rmatioe n discloe sue re, which is related toe differences in desires, goe als, and behavioe r between the principal and the agent, thue s triggering agency proe blems.A foe rm oe f effoe rt toe align the principal's interests with the agents is by selecting a boe ard oe f coe mmissioe ners and proe viding incentives (Adinda & Musdholifah, 2020).On other hand, the good corporate governance (GCG) was developed based on stewardship and agency theories, which were present first, Stewardship theory explains that managers will prioritize the interest of shareholders in carrying out company operations transparently (Paramita & Ali, 2023).The implementatioe n oe f agency theoe ry in this research ue ses the value es oe f the aue dit coe mmittee, boe ard oe f coe mmissioe ners, boe ard oe f directoe rs, managerial oe wnership, and institue tioe nal oe wnership.
An aue dit coe mmittee is essential in a goe oe d coe rpoe rate goe vernance mechanism becaue se this sue pervisioe n is carried oe ue t toe improe ve the coe mpany's perfoe rmance.A large nue mber oe f aue dit coe mmittees will increase the nue mber oe f ideas foe r improe ving the que ality oe f the coe mpany soe that it can minimize the poe tential foe r financial distress (Ersyafdi et al., 2022).The greater the nue mber oe f aue dit coe mmittees in a coe mpany, the moe re influe ential it will be in improe ving its oe peratioe ns.It can sue pervise every management activity oe f a coe mpany.Thue s, the higher the size oe f the aue dit coe mmittee, the smaller the chance oe f the coe mpany experiencing financial distress.Based oe n agency theoe ry, the aue dit coe mmittee is oe ne oe f the moe st essential bue siness toe oe ls foe r resoe lving agency coe nflicts, and minimizing agency coe sts, and minimizing the poe ssibility oe f the coe mpany experiencing financial distress (Hariyani & Kartika, 2021).Research coe ndue cted by (Munawar et al., 2018); (Masak & Noviyanti, 2019); (Nasiroh & Priyadi, 2018), states that the aue dit coe mmittee has a negative effect oe n financial distress.Meanwhile, research coe ndue cted by (Ma'ruf & Kresnamurti, R, 2018); (Khoirunnisa Harahap et al., 2022); (Hanifah & Purwanto, 2013), states that the aue dit coe mmittee doe es noe t affect financial distress.Based oe n agency theoe ry, the hypoe thesis that will be proe poe sed is that the aue dit coe mmittee has a negative effect oe n financial distress.In this research, in general, the aue dit coe mmittee can be calcue lated ue sing the foe rmue la:

Audit Committee = ∑ Audit Committee Members
Thus the first hypothesis (H1a) in this study is: H1a: The aue dit coe mmittee has a negative effect oe n financial distress The boe ard oe f coe mmissioe ners is oe ne oe f the goe oe d coe rpoe rate goe vernance mechanisms needed toe redue ce agency proe blems between principals and agents.This is sue ppoe rted by the existence oe f agency theoe ry soe that it doe es noe t caue se agency coe sts that can caue se financial distress toe the coe mpany.In this way, the boe ard oe f coe mmissioe ners can influe ence financial distress.A boe ard oe f coe mmissioe ners with goe oe d perfoe rmance will have a goe oe d influe ence oe n the coe mpany.The moe re the coe mmissioe ners there are in a coe mpany, the moe re parties will sue pervise the coe mpany's oe peratioe nal perfoe rmance.The greater the nue mber oe f boe ard oe f coe mmissioe ners in a coe mpany, the less likely the coe mpany is toe experience financial distress.Research coe ndue cted by (Bravo & Moreno, 2021) and (Triwahyuningtyas & Muharam, 2012), states that the boe ard oe f coe mmissioe ners negatively influe ence financial distress.Meanwhile, research was coe ndue cted by (Hanifah & Purwanto, 2013), states that the boe ard oe f coe mmissioe ners has a poe sitive effect oe n financial distress.Based oe n agency theoe ry, the hypoe thesis proe poe sed is that the boe ard oe f coe mmissioe ners has a negative effect oe n financial distress.In this research, in general, the boe ard oe f coe mmissioe ners can be calcue lated ue sing the foe rmue la: https://www.ilomata.org/index.php/ijtc

Board of Commissioners = ∑ Board of Commissioners Members
Thus the first hypothesis (H1b) in this study is: H1b: The boe ard oe f coe mmissioe ners has a negative effect oe n financial distress The board of directors is responsible for making decisions that influence the company's financial health.Their power to delegate, hire and fire executives, accept loans, and financially define dividend and options policies affect companies.Agency theory explains how companies under financial distress can decline when boards display conflict or make unreasonable decisions (Mariano et al., 2021).The boe ard oe f directoe rs is oe ne oe f the applicatioe ns oe f goe oe d coe rpoe rate goe vernance in a coe mpany, which accoe rding toe agency theoe ry, has a roe le as a way toe minimize coe mpany agency proe blems becaue se, with the right size oe f the boe ard oe f directoe rs, the coe mpany's oe peratioe nal activities will rue n oe ptimally toe redue ce the poe ssibility oe f agency proe blems, which oe ccue rs as a resue lt oe f the inapproe priate size oe f the boe ard oe f directoe rs.Research coe ndue cted by (Mayda, 2021); (Freitas Cardoso et al., 2019); (Febriyanti & Khalifaturofi'ah, 2023); (Manzaneque et al., 2016), state that the boe ard oe f directoe rs has a negative effect oe n financial distress.Meanwhile, accoe rding toe (Helena & Saifi, 2018), the boe ard oe f directoe rs poe sitively influe ences oe n financial distress.Meanwhile, research coe ndue cted by (Nasiroh & Priyadi, 2018); (Arrum & Wahyono, 2021), states that the boe ard oe f directoe rs has noe effect oe n financial distress.Based oe n agency theoe ry, the hypoe thesis proe poe sed is that the boe ard oe f directoe rs has a negative effect oe n financial distress.In this research, in general, the boe ard oe f directoe rs can be calcue lated ue sing the foe rmue la:

Board of Directors = ∑ Board of Directors Members
Thus the first hypothesis (H1c) in this study is: H1c: The boe ard oe f directoe rs has a negative effect oe n financial distress The relatioe nship between managerial oe wnership and financial distress is based oe n agency theoe ry, which aims toe eque alize views and minimize coe nflicts oe f interest toe ensue re a coe mpany avoe ids financial distress.Managerial oe wnership can proe vide high levels oe f infoe rmatioe n if the nue mber oe f members in managerial oe wnership is high toe proe vide anticipatioe n oe f the poe ssibility oe f financial distress.Increasing managerial oe wnership shoe ws coe rpoe rate goe vernance coe ntroe l in preventing agency proe blems soe that managerial oe wnership can align management interests with sharehoe lders (Deviacita & Achmad, 2012).The greater the managerial ownership, the more remarkable the ability to unite the interests of shareholders and managers.Increasing managerial ownership can minimize the opportunity for financial distress to occur in the company.The greater the managerial ownership in a company, the greater the possibility of financial distress arising.(Manzaneque et al., 2016).Based oe n agency theoe ry, managerial oe wnership negatively influe ences financial distress.Research coe ndue cted by (Nasiroh & Priyadi, 2018); (Hanifah & Purwanto, 2013); (Chen et al., 2020), states that managerial oe wnership has a negative effect oe n financial distress.Meanwhile, accoe rding toe (Ma'ruf & Kresnamurti, R, 2018), managerial oe wnership poe sitively affects financial distress.
Based oe n agency theoe ry, the hypoe thesis proe poe sed is that institue tioe nal oe wnership has a negative affect oe n financial distress.In this research, generally, institue tioe nal oe wnership can be calcue lated ue sing the foe rmue la: Thus the first hypothesis (H1e) in this study is: H1e: Institue tioe nal oe wnership has a negative effect oe n financial distress The relatioe nship between firm size and financial distress is based oe n signaling theoe ry, interpreting a coe mpany's finances froe m all its asset value es.The larger a coe mpany, the greater the assets its oe wns toe meet its matue ring oe bligatioe ns.This situe atioe n can minimize the poe tential foe r financial distress.
The larger the size oe f a coe mpany, the smaller the poe tential foe r financial distress (Rahma & Dillak, 2021).Based oe n this statement, it is sue spected that firm size negatively influe ences financial distress.
Research coe ndue cted by (Rahma & Dillak, 2021); (Dirman, 2020); (Susilawati et al., 2017), states that firm size has a negative effect oe n financial distress.Meanwhile, research coe ndue cted by (Khoirunnisa Harahap et al., 2022); (Zelie, 2019); (Kristanti et al., 2016), states that firm size doe es noe t affect financial distress.Based oe n this statement, the hypoe thesis proe poe sed is that firm size has a negative affect oe n financial distress.In this research, generally, firm size can be calcue lated ue sing the foe rmue la: = Ln Toe tal Asset Thus the second hypothesis (H2) in this study is: H2: Firm size has a negative effect oe n financial distress The relatioe nship between the value es oe f oe perating capacity and financial distress is based oe n signaling theoe ry, explaining that sending signals aboe ue t a coe mpany's finances is fue nded by debt.A high oe perating capacity indicates that the coe mpany sue ccessfue lly markets its proe due cts, increasing sales and proe fits.The higher the level oe f oe perating capacity, the smaller the poe tential foe r financial distress becaue se the coe mpany is coe nsidered capable oe f generating proe fits (Widhiari & Merkusiwati, 2015).Research coe ndue cted by (Setyowati & Sari, 2019); (Widhiari & Merkusiwati, 2015); (Susilowati et al., 2020), states that oe perating capacity has a negative effect oe n financial distress.Meanwhile, accoe rding toe (Khasanah et al., 2021), oe perating capacity poe sitively affect financial distress.Meanwhile, research by (Arrum & Wahyono, 2021), states that oe perating capacity doe est noe t affect financial distress.Based oe n this statement, the hypoe thesis proe poe sed is that oe perating capacity has a negative effect oe n financial distress.In this research, oe perating capacity can generally be calcue lated ue sing the foe rmue la: Toe tal Asset Tue rn Oe ver = Sales Toe tal Asset × 100% Thus the third hypothesis (H3) in this study is: H3: Oe perating capacity has a negative effect oe n financial distress Financial distress is associated with at least a company's incapacity to pay obligations or debt when due (Geng et al., 2015).Accoe rding toe (Ninh et al., 2018), financial distress is when a coe mpany cannoe t fue lfill its oe bligatioe ns due e toe decreased illique id bue siness oe peratioe ns and high fixed coe sts.Meanwhile, accoe rding toe (Yazdanfar & Ohman, 2020), financial distress is a coe nditioe n where coe mpanies tend toe have loe w cash floe w and experience financial difficue lties.Financial distress in this stue dy ue ses a due mmy variable, which proe vides twoe categoe ries, namely zeroe (0) foe r poe sitive earnings per share (EPS) and oe ne (1) foe r negative earnings per share (EPS) (Widhiari & Merkusiwati, 2015).
On other hand, (Habib et al., 2013), assess that earnings management practices are appropriate for predicting financial distress during the global financial crisis.The research found that managers of companies that were under pressure were more involved in earnings management practices by reducing revenues during times of trouble; this research proves that pricing during the global financial crisis provides incentives for managers to manipulate profits so that investors can make better investment decisions in companies experiencing financial difficulties.
This research loe oe ks at a coe mpany experiencing financial distress as proe xied by earnings per share (EPS).Earnings per share oe r proe fit per share is a measue re oe f a coe mpany's ability toe generate proe fits per oe wner's share (Sutrisno, 2017).Earnings per share (EPS) is essential infoe rmatioe n that is very impoe rtant foe r an investoe r becaue se EPS describes the coe mpany's proe fits foe r a perioe d.EPS can explain hoe w a coe mpany perfoe rms, in the past and fue tue re.A coe mpany that has poe sitive earnings per share (EPS) oe r experiences coe ntinue oe ue s increases in each perioe d shoe ws goe oe d proe spects in the fue tue re and can attract investoe rs toe invest in the coe mpany.Hoe wever, if EPS is negative oe r experiences a coe ntinue oe ue s decline, this indicates poe oe r proe spects in the fue tue re.In this research, EPS can generally calcue lated ue sing the foe rmue la:  3) Coe mpanies that proe vide all the reque ired data regarding research variables, namely aue dit coe mmittee, boe ard oe f coe mmissioe ners, boe ard oe f directoe rs, managerial oe wnership, institue tioe nal oe wnership, firm size, and oe perating capacity.Based oe n the criteria, 25 coe mpanies were oe btained as research samples.The secoe ndary data soe ue rce foe r this research coe mes froe m the oe fficial website oe f the Indoe nesia Stoe ck Exchange (BEI), namely IDX.coe .id.The data analysis technique e ue ses loe gistic regressioe n analysis, sue ppoe rted by the IBM SPSS 25 proe gram.The loe gistic regressioe n analysis stage inclue des assessing the feasibility oe f moe del fit, oe verall moe del feasibility testing, coe efficient oe f determinatioe n, classificatioe n matrix testing, and hypoe thesis testing (Ghozali, 2018).The loe gistic regressioe n eque atioe n is as foe lloe ws:

Model Feasibility Test Results (Goodness of Fit Test)
Moe del feasibility testing (goe oe dness oe f fit test) can be carried oe ue t by paying attentioe n toe Hoe smer Lemeshoe w's Goe oe dness oe f Fit Test oe ue tpue t.This test is carried oe ue t toe assess the hypoe thesized moe del soe that the empirical data is sue itable foe r by the research moe del.Froe m the oe ue tpue t resue lt aboe ve, it can be seen that the chi-sque are value e is 10,640 with a p-value e (sig) oe f 0,223 > 0,05, soe the nue ll hypoe thesis (H0) is accepted.It means that the loe gistic regressioe n moe del is sue itable foe r fue rther analysis becaue se there is noe real difference between the predicted and oe bserved classificatioe ns.This means that the moe del can predict the oe bserved value es well.

Overall Model Test Results (Overal Fit Test)
The oe verall moe del can be assessed by paying attentioe n toe the initial -2 loe g likelihoe oe d value e when the moe del oe nly inclue des coe nstants (bloe ck nue mber 0), with the final -2 loe g likelihoe oe d value e when the moe del inclue des coe nstants and independent variables (bloe ck nue mber 1).Fue rthermoe re, if there is a decrease, the moe del shoe ws a goe oe d regressioe n moe del.Froe m the SPSS 25 oe ue tpue t resue lts aboe ve, it can be seen that the initial -2 loe g likelihoe oe d value e (bloe ck nue mber 0) is 193,608, and the final -2 loe g likelihoe oe d value e (bloe ck nue mber 1) is 156,889.These resue lts shoe w that there has been a decrease in the value e at the final -2 loe g likelihoe oe d (bloe ck nue mber 1), soe the oe verall moe del shoe ws a goe oe d regressioe n moe del.

Hypothesis Test Partial Test (Uji t)
Accoe rding toe (Ghoe zali, 2018), this test shoe ws hoe w far the influe ence oe f the independent variable (X) individue ally is in explaining the dependent variables (Y).The resue lts oe f statistical calcue latioe ns in this research ue sed SPSS versioe n 25 data proe cessing.The partial test resue lts can be oe btained as foe lloe ws: Based oe n table 4, the loe gistic regressioe n moe del eque atioe n is oe btained as foe lloe w: Froe m the eque atioe n moe del, it shoe ws that: 1.
A coe nstant value e oe f 1,581 indicates that with the influe ence oe f independent variables, namely the aue dit coe mmittee, boe ard oe f coe mmissioe ners, boe ard oe f directoe rs, managerial oe wnership, institue tioe nal oe wnership, firm size, and oe perating capacity, the coe mpany's chances oe f experiencing financial distress will increase by 1,581.2.
The coe efficient (β1) oe n the aue dit coe mmittee is -0,714, indicating that foe r every 1 ue nit increase in the aue dit coe mmittee, the chance oe f a coe mpany experiencing financial distress will decrease by 0,714.

3.
The coe efficient value e (β2) foe r the boe ard oe f coe mmissioe ners is -0,229, indicating that foe r every increase in the boe ard oe f coe mmissioe ners by 1 ue nit, the chance oe f a coe mpany experiencing financial distress will decrease by 0,229.4.
The coe efficient value e (β3) foe r the boe ard oe f directoe rs is -0,473, indicating that foe r every 1 ue nit increase in the boe ard oe f directoe rs, the chance oe f a coe mpany experiencing financial distress will decrease by 0,473.

5.
The coe efficient value e (β4) oe n managerial oe wnership is 0,068, indicating that foe r every 1 ue nit increase in managerial oe wnership, the chance oe f a coe mpany experiencing financial distress will increase by 0,068.6.
The coe efficient value e (β5) oe n institue tioe nal oe wnership is 0,021, indicating that foe r every 1 ue nit increase in institue tioe nal oe wnership, the chance oe f a coe mpany experiencing financial distress will increase by 0,021.7.
The coe efficient value e (β6) oe n firm size is 0,898, indicating that foe r every 1 ue nit increase in firm size, the chance oe f a coe mpany experiencing financial distress will increase by 0,898.8.
The coe efficient value e (β7) oe n oe perating capacity is -1,244, indicating that foe r every 1 ue nit increase in oe perating capacity, the chance oe f a coe mpany experiencing financial distress will decrease by 1,244.

Simultaneous Test (Uji F)
This test is carried oe ue t toe test whether the independent variables simue ltaneoe ue sly influe ence the dependent variable.Toe determine whether (H0) is accepted oe r rejected it is based oe n a significance level oe f 5%.The test resue lts can be seen in the foe lloe wing table:  5, the chi-sque are value e is 36,719, with a significant value e oe f 0,035 < 0,05.This means that H0 is rejected and Ha is accepted, that simue ltaneoe ue sly, goe oe d coe rpoe rate goe vernance, firm size, and oe perating capacity influe ence financial distress.

Coefficient of Determination (Nagelkerke's R Square)
The coe efficient oe f determinatioe n test is ue sed toe determine the percentage oe f influe ence oe f the independent and dependent variables.In loe gistic regressioe n, Nagelkerke's R sque are oe ue tpue t is ue sed.
A value e cloe se toe oe ne means that the independent variable proe vides almoe st all the infoe rmatioe n needed toe predict variatioe ns in the dependent variable.The test resue lts can be seen in the foe lloe wing

Classification Matrix
This test is carried oe ue t toe predict the poe ssibility oe f the coe mpany experiencing financial difficue lties.The predictive poe wer in this stue dy is expressed in percentage.The test resue lts can be seen in the foe lloe wing table: Based oe n table 7 shoe ws that the predictioe n foe r coe mpanies experiencing financial distress characterized by negative earnings per share (EPS) is 48,1%, which is predicted by 25 oe ue t oe f a toe tal oe f 52 oe bservatioe ns, and coe mpanies that doe noe t experience financial distress are characterized by earnings per share (EPS) poe sitive was 87,8%, namely predicted by 86 oe ue t oe f a toe tal 98 oe bservatioe ns.Oe verall, it shoe ws that 86 + 25 = 111 samples, oe r 74% oe f the samples, can be ue sed with this loe gistic regressioe n moe del.

The Influence of The Audit Committee on Financial Distress
Based oe n the loe gistic regressioe n test aboe ve resue lts, the aue dit coe mmittee doe es noe t affect financial distress.This can be seen in Table 4, which shoe ws a significance value e oe f 0,196, where 0,196 is moe re significant than 0,05.Soe , in this case, H0 is accepted, and Ha is rejected.Thue s, this research rejects the hypoe thesis (H1a), which states that the aue dit coe mmittee has a negative affect oe n financial distress.This research is noe t in line with agency theoe ry, which states that an aue dit coe mmittee is oe ne oe f the moe st impoe rtant bue sinesses foe r resoe lving coe mpany agency coe nflicts toe minimize agency coe sts and minimize the poe tential foe r financial distress.A large nue mber oe f aue dit coe mmittees will give rise toe many oe pinioe ns, making them ineffective in determining the coe mpany's decisioe n making.The increasing nue mber oe f aue dit coe mmittees caue ses difficue lties in determining an agreement in carrying oe ue t their perfoe rmance (Hanifah & Purwanto, 2013).Froe m the resue lts oe f this research, the aue dit coe mmittee cannoe t avoe id the coe mpany's poe tential financial distress.

The Influence of the Board of Commissioners on Financial Distress
Based oe n the loe gistic regressioe n test resue lts aboe ve, it can be seen that the boe ard oe f coe mmissioe ners has a negative effect oe n financial distress.This can be seen in Table 4, which shoe ws a significance value e oe f 0,006, where 0,006 is minoe r coe mpared toe 0,05.Soe , in this case, H0 is rejected, and Ha is accepted.Thue s, this research accepts the hypoe thesis (H1b), which states that the boe ard oe f coe mmissioe ners has a negative affect oe n financial distress.This research is in line with agency theoe ry, which states that the boe ard oe f coe mmissioe ners is a goe oe d coe rpoe rate goe vernance mechanism that can redue ce agency proe blems between principals and agents soe as noe t toe caue se agency coe sts that can caue se financial distress in the coe mpany.This shoe ws that the greater the nue mber oe f boe ard oe f coe mmissioe ners in a coe mpany, the less likely the coe mpany will experience financial distress.Becaue se the greater the nue mber oe f coe mmissioe ners in a coe mpany, the moe re parties there are whoe moe nitoe r the coe mpany's oe peratioe nal perfoe rmance.Coe nversely, if a coe mpany has a small boe ard oe f coe mmissioe ners, sue pervisioe n will weaken and coe ue ld poe tentially experience financial distress.
The research resue lts are in line with research coe ndue cted by (Bravo & Moreno, 2021) (Triwahyuningtyas & Muharam, 2012), which states that the boe ard oe f coe mmissioe ners negatively affect financial distress.Hoe wever, this research coe ntradicts research coe ndue cted by (Hanifah & Purwanto, 2013), which states that the boe ard oe f coe mmissioe ners poe sitively affect oe n financial distress.

The Influence of the Board of Directors on Financial Distress
Based oe n the loe gistic regressioe n test resue lts aboe ve, it can be seen that the boe ard oe f directoe rs has a negative effect oe n financial distress.This can be seen in Table 4, which shoe ws a significance value e oe f 0,001, where 0,001 is minoe r coe mpared toe 0,05.Soe , in this case, H0 is rejected, and Ha is accepted.Thue s, this research accepts the hypoe thesis (H1c), which states that the boe ard oe f directoe rs has a negative affect oe n financial distress.This research is in line with agency theoe ry, which states that the boe ard oe f directoe rs plays the roe le oe f a goe oe d coe rpoe rate goe vernance mechanism that can minimize the coe mpany's agency proe blems becaue se, with the right size oe f the boe ard oe f directoe rs, the coe mpany's oe peratioe nal activities will rue n oe ptimally soe that it can minimize agency coe sts and minimize the poe tential foe r financial distress, caue sed by the inapproe priate size oe f the boe ard oe f directoe rs.This shoe ws that the greater the nue mber oe f boe ard oe f directoe rs in a coe mpany, the moe re it minimizes the poe tential foe r financial distress becaue se the boe ard oe f directoe rs make decisioe ns that are beneficial foe r the coe mpany's sue rvival and proe vide proe fits foe r the coe mpany.The moe re the boe ard oe f directoe rs, the moe re influe ential the coe mpany is in making decisioe ns toe avoe id the poe tential foe r financial distress.
The resue lts oe f this research are in line with research coe ndue cted by (Mayda, 2021); (Freitas Cardoso et al., 2019); (Febriyanti & Khalifaturofi'ah, 2023), which stated that the boe ard oe f directoe rs has a negative affect oe n financial distress.Hoe wever, this is differs froe m research coe ndue cted by (Helena & Saifi, 2018), the boe ard oe f directoe rs poe sitively influe ences oe n financial distress.Meanwhile, research coe ndue cted by (Nasiroh & Priyadi, 2018); (Arrum & Wahyono, 2021), which state that the boe ard oe f directoe rs doe es noe t affect financial distress.Based oe n the coe nclue sioe ns aboe ve, advice can be given toe coe mpanies, investoe rs, and poe tential investoe rs toe pay attentioe n toe goe oe d coe rpoe rate goe vernance soe that their roe le in a coe mpany becoe mes oe ptimal and is a step toe proe tect the coe mpany froe m financial difficue lties oe r financial distress.It can alsoe , it can help proe vide infoe rmatioe n regarding the coe mpany's sue itability coe nditioe ns foe r investoe rs in investing their capital in a coe mpany.Large companies may experience financial distress because of their inability to compete.Therefore, investors should be more vigilant in investing their fund (Dianova & Nahumury, 2019).There are limitations in this research; it is recommended that further researchers expand the research sample because the study only took samples from the retail trade sub-sector, and the researcher suggests that future researchers can add other variables so that financial distress can be projected widely and the research is more concrete.
ses que antitative methoe ds with descriptive and assoe ciative approe aches.The research poe pue latioe n in the retail trade sue b-sectoe r listed oe n the Indoe nesia Stoe ck Exchange in 2017-2022 was 27 coe mpanies.The sample was determined ue sing a pue rpoe sive sampling technique e, with the foe lloe wing criteria: (1) Coe mpanies that are coe nsistently inclue ded in the retail trade sue b-sectoe r listed oe n the Indoe nesia Stoe ck Exchange in 2017-2022.(2) Coe mpanies that pue blish financial repoe rts regue larly foe r six years in 2017-2022.( effect oe n financial distress in retail trade sue b sectoe r listed oe n the Indoe nesia Stoe ck Exchange foe r 2017-2022.Managerial oe wnership doe es noe t affect financial distress in retail trade sue b-sectoe r listed oe n the Indoe nesia Stoe ck Exchange foe r 2017-2022.Institue tioe nal oe wnership doe es noe t affect financial distress in retail trade sue b-sectoe r listed oe n the Indoe nesia Stoe ck Exchange foe r 2017-2022.Firm size doe es noe t affect financial distress in retail trade sue b sectoe r listed oe n the Indoe nesia Stoe ck Exchange foe r 2017-2022.Oe perating capacity has a negative effect oe n financial distress in retail trade sue bsectoe r listed oe n the Indoe nesia Stoe ck Exchange foe r 2017-2022.Simue ltaneoe ue sly, the aue dit coe mmittee, boe ard oe f coe mmissioe ners, boe ard oe f directoe rs, managerial oe wnership, institue tioe nal oe wnership, firm size, and oe perating capacity influe ence financial distress in retail trade sue b-sectoe r listed oe n the Indoe nesia Stoe ck Exchange foe r 2017-2022.

The Influence of Good Corporate Governance, Firm Size, and Operating Capacity on Financial Distress (Study of Retail Trade Sub-Sector Companies Listed on The Indonesian Stock Exchange in 2017-2022) Nurhadimah
and Paramita https://www.ilomata.org/index.php/ijtc

Table 4 .
Partial Test

Table 6 shoe
ws Nagelkerke's R Sque are value e oe f 0,348, which means that the independent variable can explain 34,8% oe f the dependent variable, and the remaining 65,2% is explained by oe ther variables noe t inclue ded in this research.