Journal of Accounting and Management Information Systems (JAMIS)

Corporate financial performance employing corporate rating methodology: Indonesia case study

22/2007 ,   p 6..19


Keywords:   Corporate financial performance, business risks


This paper presents the financial performance of corporations in Indonesia utilizing Standard & Poor’s rating methodology during year 2001-2003. We believe this International rating agency has high credibility in measuring the financial performance of the corporations. Moreover, by analyzing the performance post crisis will give us a good picture of the financial strength of Indonesia’s corporations, whether the companies are recovery yet from the crisis.

The finding is that most of the companies have unfavorable ratios, which more than 50% of our samples are incompatible with Standard & Poor’s CCC rating’s companies. It means most of Indonesia’s corporations have a low credibility. The reasons are namely lower world trade, and rising number of low-cost competitors for the external factors, and the internal factors, such as limited financing for business activities, the government policies related to price and tariff adjustments, high business risks, rising production costs, and new levies growing out of regional autonomy.