ISSN 0128-2611 © 2017 Global Academy of Training & Research (GATR) Enterprise. All rights reserved. Accoun�ng and Finance Review Journal homepage: www.gatrenterprise.com/GATRJournals/index.html Acc. Fin. Review 2 (2) 26 – 34 (2017) GATR JOURNALS Corporate Governance, Financial Ratios, Political Risk and Financial Distress: A Survival Analysis Farida Titik Kristanti 1 * and Aldrin Herwany 2 1 Department of Accounting, Faculty of Economics & Business, Telkom University, Bandung, Indonesia. 2 Department of Management & Business, Faculty of Economics & Business, Universitas Padjadjaran, Indonesia ABSTRACT Objective – The objective of this study was to investigate the factors like corporate governance, financial ratios, and political risk and their impacts on company’s survival. Methodology/Technique – Collecting data of Indonesian Stock Exchange from 2000 to 2014 and employing purposive random sampling, this research collects samples of 58 companies undergoing financial distress and 275 others which do not. Findings – The research eventually proves that agency theory and Asymmetric Information theory do occur in Indonesia. With Cox Proportional Hazard model, it then proves that all two models employed: independence commissioners, leverage, operating risk, size, return on asset and control of corruption, are variables which consistently affect financial distress of the company. Novelty – The study uses original data and gives supported suggestion for the researched issues. Type of Paper: Empirical Keywords: Financial Distress; Financial Ratios; Corporate Governance; Political Risk. JEL Classification: G01, G34, M48 _______________________________________________________________________________________ 1. Introduction Theoretically, the company conducts its business activities to achieve its basic goal of earning a profit. Many ways are done to achieve that goal so that the company can operate continuously. But in its development, there are companies that succeed and there are companies that fail in maintaining its sustainability. Failure of a company that describes the process of adverse economic and financial conditions experienced by the company is defined differently. There are generally four characteristics of this unsuccessful company: failure, insolvency, default, and bankruptcy. Bankruptcy does not always happen, but when it comes, it will affect a country either economically or socially. Altman (1984) avers that the total cost of such bankruptcy, both direct and indirect costs, is around 15% of the corporate value of the industry and 7% for retailers prior to distress. In fact, apart from economic turbulence, bankruptcy does evoke social problems as well, especially for those involved in the company and their families too (Argenti, 1976). * Paper Info: Received: November 14, 2016 Accepted: April 12, 2017 * Corresponding author: E-mail: faridatk@telkomuniversity.ac.id Affiliation: Faculty of Economics & Business, Telkom University, Indonesia.