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By Sutaryo


The purpose of research is gaining the empirical evidence related with the local government financial report relevancy value which existing in the financial performance ratio, financial position ratio, efficiency ratio and debt ratio in predicting financial distress of the Indonesian local government. Therefore, related with the purpose of the research, the writer uses all population in the all regencies/municipalities that issued the local governmental financial report and publicized in the website of Indonesian Financial Inspector Bureau, (BPK RI) at 2005, 2006 and 2007. The method used in the research is purposivesampling method then geting148 regencies/municipalities in 2005 and 84 regencies/municipalities in 206, therefore the total observation used in the research is 232. The data analyses tool used in the research is binary logistic regression then it uses SPSS version 16.00 computer software for statistic The result of the research shows empirical evidences that in one year tested prediction after the issuing of the government financial report, the information in ROA, POSGW, CLGW, LQ, CL and LTDAratio able to be used in predicting the local government probability in financial distress. Meanwhile in the two years prediction test after the issuing of local government financial report, it is proved that the PERGW, LCO, LTDA and DTRcan predict the Indonesian local government probability in financial distress. The result identifies that the information in the Indonesian local government financial reports have the predictive value, therefore it is relevant to be used in taking the decision as what mentioned in PSAP number1, which related with the arrangement of governmental financial report. The research limitations are related with the independent variables, data and the sample used. Related with all limitations above, this research recommends that in the next research will be possible to add the other independent variables which predicted as financial distress predictor. The research also recommends using the longer period prediction data and separated research samples based on certain groups, such as the local government which has extended area and which has no extended area then it is expected to gain a deeper research result

Topics: HG Finance
Year: 2009
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