THE IMPACT OF SUSTAINABILITY REPORTING AND FINANCIAL PERFORMANCE ON FINANCIAL DISTRESS: THE MODERATING ROLE OF FIRM AGE

Abstract

Financial distress occurs when companies face significant financial difficulties, potentially leading to insolvency due to the inability to meet short- and long-term obligations. This study investigates the effect of liquidity (current ratio), leverage (debt to equity ratio), and sustainability reporting on financial distress, with firm age as a moderating variable. Using a Systematic Literature Review (SLR) method, this research synthesizes findings from 30 high-quality peer-reviewed journal articles published between 2018 and 2024. The empirical context focuses on 23 land transportation and logistics companies listed on the Indonesia Stock Exchange (IDX) during 2020–2024, selected through purposive sampling. Panel data regression analysis was applied to assess the relationships among variables. The results indicate that sustainability reporting aligned with Global Reporting Initiative (GRI) standards significantly reduces the risk of financial distress by improving corporate transparency and operational efficiency. Liquidity shows a negative association with financial distress, highlighting its role in financial resilience, while the impact of leverage varies depending on how debt is managed within the firm. Moreover, firm age positively moderates the relationship between sustainability reporting and financial distress, suggesting that older firms are more capable of implementing effective sustainability practices. These findings provide valuable implications for managers and policymakers in the transportation and logistics sector to develop risk mitigation strategies that incorporate both financial performance and sustainability dimensions.