Financial Distress Announcements, Transaction Mode Change, and Aggregate Shareholder Wealth: Empirical Evidence from TAIEX-Listed Companies

This study is to address the estimation of financial distress costs including the deterioration in asset value. A sample of 104 TAIEX-listed financially distressed companies was collected covering the period from 1998 to 2004. As expected, it is found that the TAIEX-listed financially distressed companies have registered a huge reduction in stock price. Moreover, as expected, it is found that the financial distress costs of the "delisting" group are largest, the financial distress costs of the "maintaining normal trading" group are lowest, and the financial distress costs of the "cash transaction only/suspended trading" group fall somewhere in between. Based on the empirical findings, the present study concludes that the magnitude of financial distress costs is substantially underreported in the literature as a result of ignoring deterioration in asset value.

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Accounting Information and Stock Price Reaction of Listed Companies — Empirical Evidence from 60 Listed Companies in Shanghai Stock Exchange

Journal of Business & Management ◽

10.12735/jbm.v2i2p11 ◽

2013 ◽

Vol 2 (2) ◽

pp. 11-21 ◽

Cited By ~ 1

Author(s):

Junjie Wang ◽

Keyword(s):

Empirical Evidence ◽

Stock Price ◽

Stock Exchange ◽

Accounting Information ◽

Listed Companies ◽

Price Reaction ◽

Stock Price Reaction

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Modeling of Financial Distress Probability for Vietnamese Listed Companies

Journal of Economics and Development ◽

10.33301/2014.16.03.04 ◽

2014 ◽

pp. 68-81

Author(s):

Yen Phu Kim ◽

Hiep Nguyen Manh

Keyword(s):

Market Efficiency ◽

Financial Distress ◽

Logit Model ◽

Stock Exchange ◽

Listed Companies ◽

Information Cost ◽

Factors Influencing ◽

Financially Distressed ◽

Convenient Model

To date, an in-depth discussion of the factors influencing financial distress in Vietnam is still lacking. This paper explores the determinants of corporate financial distress of Vietnamese firms listed on the Hochiminh Stock Exchange using a dynamic logit model. We find that financially distressed enterprises have highly leveraged capital structures with low liquidity and low profitability. The financial distress probability is more pronounced for firms with small capitalization as well as those newly established and less profitable. With the hope of improving market efficiency, we finally come up with a simple, convenient model which helps investors estimate a firm’s financial distress probability without information cost.

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Political connections and government subsidies of the companies falling into financial distress—Empirical evidence from Chinese ST listed companies

The 2nd International Conference on Information Science and Engineering ◽

10.1109/icise.2010.5691916 ◽

2010 ◽

Author(s):

Yue Pan ◽

Yiyi Dai ◽

Caixi Li

Keyword(s):

Empirical Evidence ◽

Financial Distress ◽

Listed Companies ◽

Political Connections ◽

Government Subsidies

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Long-run performance of firms emerging from financial distress: Empirical evidence from Malaysia

Economics and Business Letters ◽

10.17811/ebl.7.1.2018.47-54 ◽

2018 ◽

Vol 7 (1) ◽

pp. 47 ◽

Cited By ~ 1

Author(s):

Abd Halim Ahmad ◽

Nur Adiana Hiau Abdullah ◽

Kamarun Nisham Taufil Mohd

Keyword(s):

Empirical Evidence ◽

Financial Distress ◽

Stock Exchange ◽

Long Run ◽

Financially Distressed ◽

Book To Market Ratio

We examine the long-run performance of firms emerging from financial distress in Malaysia. The sample consists of 114 companies listed on the Bursa Malaysia stock exchange that emerged from a financially distressed classification between 2001 and 2014. We investigate whether post-distressed performance is similar to the performance of firms of equivalent size and book-to-market ratio and the market indices. The results suggest that firms emerging from financial distress in Malaysia underperform when compared to the performance of firms similar in size and book-to-market ratio and the market indices. This suggests that the post-restructuring performance of firms on the Bursa Malaysia stock exchange that have emerged from financial distress does not improve.

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The Moderating Effect of Non-audit Services Fee on Aggressive Tax Planning: Empirical Evidence From Malaysian Listed Companies

International Journal of Financial Research ◽

10.5430/ijfr.v12n3p240 ◽

2021 ◽

Vol 12 (3) ◽

pp. 240

Author(s):

Rosmaria Jaffar ◽

Chek Derashid ◽

Roshaiza Taha

Keyword(s):

Developing Countries ◽

Empirical Evidence ◽

Financial Distress ◽

Capital Intensity ◽

Listed Companies ◽

Tax Planning ◽

Moderating Effect ◽

Financial Accounting ◽

The Relationship ◽

Non Audit Services

The purpose of this study is to examine the moderating effect of non-audit services fees on the relationship between size, profitability, leverage, capital intensity, inventory intensity, financial distress and ethnicity with aggressive tax planning. This study uses a sample from companies listed on the Malaysian (Access, Certainty, Efficiency (ACE) Market from 2014 to 2018, comprising of 105 firm year-observations. The finding shows that the non-audit services fee moderate the relationship between size, profitability, leverage, inventory intensity, financial distress and ethnicity with aggressive tax planning except for capital intensity. It is hoped that the finding can assist readers in understanding the nature of companies listed on the ACE Market, particularly their behaviour towards tax planning. This study contributes to knowledge in the areas of financial accounting and taxation specifically on aggressive tax planning, by introducing the moderating variable of non-audit services fee. The uniqueness of the use of companies listed on the Malaysian ACE market will provide new avenue on the discussion on an aggressive tax planning issue, which usually more focus on big firms. The framework used in the present study could serve as a basis for research in other developing countries or regions.

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Does risk management committee gender diversity matter? A financial distress perspective

Managerial Auditing Journal ◽

10.1108/maj-05-2018-1874 ◽

2019 ◽

Vol 34 (8) ◽

pp. 1050-1072 ◽

Cited By ~ 1

Author(s):

Jing Jia

Keyword(s):

Risk Management ◽

Empirical Evidence ◽

Financial Distress ◽

Gender Diversity ◽

Listed Companies ◽

Management Committee ◽

Content Type ◽

Listed Firms ◽

The Relationship ◽

Risk Management Committee

Purpose Using 2010 corporate governance principles and recommendations (CGPR) as a natural setting, the purpose of this paper is to investigate the relationship between risk management committee (RMC) gender diversity and a firm’s likelihood of financial distress. Empirical evidence regarding whether CGPR (2010) enhances RMC gender diversity (RMCGD) is also provided. Design/methodology/approach Data were collected from the annual reports of the top 300 Australian Stock Exchange (ASX) listed companies from 2007 to 2014. To control for potential endogeneity, the association between (RMCGD) and a firm’s likelihood of financial distress was investigated using an instrumental variable approach (panel 2SLS regression). The relationship between CGPR (2010) and RMCGD was explored using panel regression analysis with firm fixed effects. Findings RMCGD was found to be associated with a lower probability of financial distress, suggesting that women are better at monitoring and reducing firms’ excessive risk-taking behaviours, which, in turn, decreases firms’ risk of financial distress. The results also indicate that CGPR (2010) is quite effective in enhancing committee gender diversity. In the additional analysis, the results show that RMCGD moderates the negative relationship between risk and likelihood of financial distress. Importantly, the proportion of women with financial experience on RMCs is more effective in reducing the likelihood of financial distress compared to the proportion of men with financial experience on RMCs. These results highlight the benefits of having a gender diverse RMC. Research limitations/implications The results were based on the top 300 ASX-listed companies; thus, restricting generalisability. In addition, this study only focussed on listed firms, non-listed firms may add additional insights to the literature. Practical implications The results provide new and useful empirical evidence about RMCGD for Australian policymakers. This paper suggests that, in the short-term at least, RMCGD should be encouraged by regulators. Regulators could also recommend that the firms with a non-diverse RMC include women with financial experience on their RMC. Originality/value Given that prior studies have indicated that gender diversity is closely related to risk, this study contributes to the previous literature by investigating RMCGD and its effect on the likelihood of financial distress. It is expected that the role of RMC member would be to protect the firm from ultimate failure (likelihood of financial distress), especially during a financial crisis.

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The economic consequences of voluntary environmental reporting on shareholder wealth

Social and Management Research Journal ◽

10.24191/smrj.v3i2.5110 ◽

2006 ◽

Vol 3 (2) ◽

pp. 1 ◽

Cited By ~ 1

Author(s):

Ruslaina Yusoff ◽

Shariful Amran Abd Rahman ◽

Wan Nazihah Wan Mohamed

Keyword(s):

Abnormal Return ◽

Listed Companies ◽

Shareholder Wealth ◽

Environmental Information ◽

Economic Consequences ◽

Share Price ◽

Cumulative Abnormal Return ◽

Environmental Reporting ◽

Financial Report ◽

Significant Difference

This study was carried out to examine the economic consequences ofvoluntary environmental reporting on shareholders' wealth among Malaysian Listed Companies that voluntarily disclosed environmental information in their financial report. One hundred andfifty two (152) companies of Bursa Malaysia (MSE) had been identified as a sample in the current study. Seventy six (76) companies were classified as environmental reporting companies while the remaining companies were classified as non-environmental reporting companies. The classification was done in order to determine the differences between share price, profitability and market equity for both types of companies. The study hypothesizes that voluntary environmental reporting leads to an improvement in the shareholders wealth. However, the results show that there is no significant difference between cumulative abnormal return for environmental and non-environmental reporting companies. Based on the results obtained, it can also be concluded that profitability and size of the companies do not have any significant roles in deciding whether or not to produce environmental reporting companies.

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