International Journal of Research and Review Vol. 9; Issue: 10; October 2022 Website: www.ijrrjournal.com Research Paper E-ISSN: 2349-9788; P-ISSN: 2454-2237 International Journal of Research and Review (ijrrjournal.com) 131 Vol. 9; Issue: 10; October 2022 Effects of Return on Assets, Firm Size, and Institutional Ownership on Financial Distress with Capital Structure as a Moderating Variable (An Empirical Study on the Manufacturing Companies Listed on Indonesia Stock Exchange) Maharawati Bahri 1 , Rina Br Bukit 2 , Keulana Erwin 3 1,2,3 Department of Accounting, Faculty of Economics and Business Universitas Sumatera Utara, Indonesia Corresponding Author: Maharawati Bahri DOI: https://doi.org/10.52403/ijrr.20221015 ABSTRACT This research investigates and tests the effects of Return on Assets, firm size, and institutional ownership on financial distress in the manufacturing companies listed on the Indonesia Stock Exchange and whether the capital structure can moderate the correlation between independent and dependent variables. This causal research uses secondary data, which are analyzed using SPSS. It takes the manufacturing companies listed on Indonesia Stock Exchange from 2016 until 2020 as the population. The purposive sampling technique is employed to select 84 companies and obtain 420 observations by multiplying the sample by five years of research. The findings indicate that partially Return on Assets has positive and significant effects on financial distress, firm size has positive and significant effects on financial distress, and institutional ownership has negative and insignificant effects on financial distress. In addition, the capital structure cannot moderate the effects of Return on Assets, firm size, and institutional ownership on financial distress. Keywords: return on assets, firm size, institutional ownership, capital structure, financial distress. INTRODUCTION Business activities in the current global era have shown that competition between similar and dissimilar companies is very tight. Intense competition has resulted in companies being required to fulfil complex societal desires. Since the 1998 crisis, Indonesia's manufacturing industry has continued to stagnate. According to Bank Permata's economist, Josua Pardede in Oke Finance (2016), the growth of Indonesia's manufacturing industry has slowed since the 1998 crisis and has even been below the national economic growth. Even based on his records, in 2015, the growth of the manufacturing sector in quarters I-IV was in rows 4 0%, 4.1%, 4.5%, and 4.4%. Meanwhile, in the first-third quarters of 2016, it was 4.6%, 4.7%, and 4.6%, respectively. In addition, since the global crisis that occurred in mid-2008, Indonesia's economic condition has been quite unstable due to the inability to anticipate global economic developments, resulting in the bankruptcy of companies in Indonesia. Bankruptcy does not appear suddenly but through a process or stage where management should be able to recognize the signs of bankruptcy early on. One of the signs of bankruptcy that can be recognized early is the occurrence of financial difficulties in the related company. Mohammed & Kim-Soon (2012) stated that financial distress could be an indicator or