The Influence of Bankruptcy Predictions on Stock Returns in Mining Companies Listed on The Indonesia Stock Exchange in 2020-2023

Abstract

In 2022, a significant number of investors allocated their capital to companies within the mining sector. However, in 2023, the mining sector experienced a decline in financial performance. This downturn indicates the presence of financial distress, which, if persistent, could potentially lead to bankruptcy for these companies. Therefore, it is essential to develop analytical models to predict bankruptcy within the mining sector. Bankruptcy prediction assists investors in making informed investment decisions, specifically whether to continue or withdraw their investments. The objective of this study is to examine the influence of bankruptcy predictions using the Grover, Zmijewski, and Springate models on stock returns. The analysis in this research employs panel data regression, utilizing data from 2020 to 2023. The results indicate that bankruptcy predictions based on the Springate and Zmijewski models do not have a significant partial effect on stock returns, whereas bankruptcy predictions using the Grover model have a positive and significant effect on stock returns