scholarly journals Predicting financial distress in publicly-traded companies

2017 ◽  
Vol 28 (75) ◽  
pp. 390-406 ◽  
Author(s):  
Felipe Fontaine Rezende ◽  
Roberto Marcos da Silva Montezano ◽  
Fernando Nascimento de Oliveira ◽  
Valdir de Jesus Lameira
Keyword(s):  
Decision Making ◽  
Financial Distress ◽  
Publicly Traded ◽  
Final Model ◽  
Publicly Traded Companies ◽  
Explanatory Variables ◽  
Financial Variables ◽  
Asset Turnover ◽  
Short Time ◽  
The Relationship

ABSTRACT Several models for forecasting bankruptcy have been developed over the years, one of the reasons for which is the important part it plays in decision-making. However, forecasting a company’s bankruptcy leaves a very short time for stakeholders to change the situation. It is in this context that this paper arises in order to develop a model for predicting financial distress, which is identified as a step prior to bankruptcy. The predictive model uses the logistic regression technique with panel data and a sample of Brazilian publicly-traded companies with shares listed on the São Paulo Stock, Commodities, and Futures Exchange between 2001 and 2014. As well as financial variables, the final model includes market expectations (macroeconomic) and sector variables. These variables are statistically tested and the hypothesis is confirmed that they improve the accuracy of the model. The research identified the existence of financial distress in 96% of the companies that went bankrupt. In addition, the relationship between the phenomena of bankruptcy and financial distress is verified, using financial and macroeconomic explanatory variables. The results demonstrate that most (83%) of the explanatory variables in the model for predicting bankruptcy are also present in the model for predicting the phenomenon of financial distress. The expected gross domestic product variables and the quick ratio, asset turnover, and net equity over total liabilities financial variables are statistically significant in predicting both phenomena. With this evidence, the study suggests the use of the concept of financial distress as a stage prior to bankruptcy and provides a model for predicting financial distress with 89% accuracy when applied to publicly-traded companies in Brazil in the period examined.

scholarly journals Relevance Of Devidend Policy As The Mediation On The Relationship Between Financial Performance and Debt On Share Prices

2021 ◽  
Vol 7 (1) ◽  
pp. 180-192
Author(s):  
Irma Tyasari ◽  
Supami Wahyu Setiyowati
Keyword(s):  
Financial Performance ◽  
Stock Prices ◽  
Dividend Policy ◽  
Share Price ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Share Prices ◽  
Correlational Research ◽  
Analysis Technique ◽  
The Relationship

The investors place great importance on the share price of publicly traded companies since it may reflect the company’s value. The research objective is to examine the relationship between financial performance and debt at share prices through dividend policy. The method of the research used is quantitative and correlational research. The data analysis technique is the use of smart PLS. The results of the study explain that financial performance has a positive effect on stock prices in the mediation of dividend policy. Debt negatively affects share price mediated by dividend policy. The implication of the study is that companies should consider the benefits as well as risks of borrowing funds from third parties. Investors and potential investors before investing their money in stocks must pay attention to financial performance, corporate debt and dividend policy so that they do not experience losses in their investment.

Corporate Social Responsibility for Irresponsibility

2012 ◽  
Vol 12 (1) ◽  
Author(s):  
Matthew Kotchen ◽  
Jon J. Moon
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Community Relations ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
The Subject ◽  
Corporate Social ◽  
The Relationship ◽  
The Empirical Analysis

Abstract This paper provides an empirical investigation of the hypothesis that companies engage in corporate social responsibility (CSR) in order to offset corporate social irresponsibility (CSI). We find general support for the relationship that when companies do more “harm,” they also do more “good.” The empirical analysis is based on an extensive 15-year panel dataset that covers nearly 3,000 publicly traded companies. In addition to the overall finding that more CSI results in more CSR, we find evidence of heterogeneity among industries, where the effect is stronger in industries where CSI tends to be the subject of greater public scrutiny. We also investigate the degree of substitutability between different categories of CSR and CSI. Within the categories of community relations, environment, and human rights—arguably among those dimensions of social responsibility that are most salient—there is a strong within-category relationship. In contrast, the within-category relationship for corporate governance is weak, but CSI related to corporate governance appears to increase CSR in most other categories. Thus, when CSI concerns arise about corporate governance, companies seemingly choose to offset with CSR in other dimensions, rather than reform governance itself.

scholarly journals Internationalization and Corporate Cash Holdings: Evidence from Brazil and Mexico

2015 ◽  
Vol 19 (spe) ◽  
pp. 1-19
Author(s):  
Newton Arata ◽  
Hsia Hua Sheng ◽  
Mayra Ivanoff Lora
Keyword(s):  
Cash Holdings ◽  
Cash Holding ◽  
Publicly Traded ◽  
Pecking Order ◽  
Balance Sheets ◽  
Publicly Traded Companies ◽  
The North ◽  
The Relationship ◽  
Corporate Cash Holdings ◽  
Degree Of Internationalization

This research expands on previous studies of cash holdings and their determinants by studying the relationship between the degree of internationalization and the level of corporate cash holdings. We used a sample of non-financial, publicly traded companies from Brazil and Mexico for the period from 2006 to 2010. Our results suggest that the degree of internationalization is a determinant of cash, and that cash holding increases quadratically as the degree of company internationalization grows. Such behavior was different from the North American company studies in Chiang and Wang (2011). Similar to previous studies, both Trade-off and Pecking Order predictions are relevant control variables in our model. Finally, companies held less cash on their balance sheets during the pre-crisis period.

scholarly journals Research on Intelligent Prediction Method of Financial Crisis of Listed Enterprises Based on Random Forest Algorithm

2021 ◽  
Vol 2021 ◽  
pp. 1-7
Author(s):  
Mingxia Jiang ◽  
Xuexia Wang
Keyword(s):  
Decision Making ◽  
Random Forest ◽  
Financial Crisis ◽  
Financial Data ◽  
Actual State ◽  
Random Forest Algorithm ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Decision Making Unit ◽  
Prediction Approach

Traditional financial crisis prediction approaches have a tough time extracting the properties of financial data, resulting in financial crisis prediction with insufficient accuracy. As a result, based on the random forest algorithm, an intelligent financial crisis prediction approach for listed enterprises is proposed. The random forest method is used to mine the characteristics of financial data based on financial index data from publicly traded companies. This research develops a financial crisis prediction index system based on the findings of data feature mining. The CCR model is used to assess the efficiency of listed firms’ decision-making units with more input and output, and the efficiency index of each decision-making unit is calculated. The efficiency evaluation index of publicly traded companies is used to divide the severity of the financial crisis. The experimental results reveal that, when compared to standard prediction methods, this method’s forecast accuracy is commensurate with the actual state of businesses, and it can reduce the time it takes to predict financial crises.

scholarly journals Diversified Ownership Structure and Dividend Pay‑outs of Publicly Traded Companies

2019 ◽  
Vol 6 (345) ◽  
pp. 93-110
Author(s):  
Aleksandra Pieloch-Babiarz
Keyword(s):  
Ownership Structure ◽  
Stock Exchange ◽  
Basic Research ◽  
Ownership Concentration ◽  
Tobit Regression ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Warsaw Stock Exchange ◽  
Propensity To Pay ◽  
The Relationship

The aim of this article is to identify and characterise the relationship between the ownership structure and dividend pay‑out of listed companies. The research hypothesis states that along with an increase in a degree of ownership concentration both the propensity to pay a dividend and its amount increase. The research has been conducted on a group of 354 non‑financial companies listed on the Warsaw Stock Exchange. The basic research method is the analysis of logistic and tobit regression. The research shows that along with an increase in the complexity of the ownership structure, the share of the State Treasury, institutional investors and board members, decisions on dividend pay‑out are made more often, and the amount of dividend is higher. Examining the degree of ownership concentration expressed by the Herfindahl‑Hirschman index, diversified results have been obtained. An estimation of some regression models shows that stronger ownership concentration favours the decision to pay a dividend (dividends are paid out more frequently), however, as a degree of ownership concentration increases, a decrease in the amount of dividend is observed. The research results presented in this article are a supplement to the existing analyses carried out on the global markets and an extension of the existing research conducted on the companies listed on the Warsaw Stock Exchange.

scholarly journals Predicting financial distress using financial and non-financial variables

2015 ◽  
Vol 8 (1) ◽  
pp. 243-260 ◽  
Author(s):  
Francois Van Der Colff ◽  
Frans Vermaak
Keyword(s):  
Financial Distress ◽  
Reasonable Doubt ◽  
Test Results ◽  
Financial Variables ◽  
Model Based ◽  
Financial Distress Prediction ◽  
Model Combining ◽  
Proposed Model ◽  
Distress Prediction ◽  
The Relationship

This study attempts to clarify whether using a hybrid model based on non-financial variables and financial variables is able to provide a more accurate company financial distress prediction model than using a model based on financial variables only. The relationship between the model test results and the De la Rey K-Score for the subject companies is tested, employing Cramer’s V statistical test. A movement towards a Cramer’s V value of one indicates a strengthening relationship, and a movement towards zero is an indication of a weakening relationship. Against this background, further empirical research is proposed to prove that a model combining financial variables with true non-financial variables provides a more accurate company distress prediction than a financial variable-only model. The limited evidence of a strengthening relationship found is insufficient to establish the superiority of the proposed model beyond reasonable doubt.

scholarly journals Does capital structure influence the performance of corporate social responsibility? An analysis in companies of the world's largest economies

2021 ◽  
Vol 15 ◽  
pp. e174007
Author(s):  
Paula Pontes de Campos-Rasera ◽  
Gabriela de Abreu Passos ◽  
Romualdo Douglas Colauto
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Capital Structure ◽  
Empirical Studies ◽  
Debt Financing ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Corporate Social ◽  
The Relationship ◽  
The Capital Structure

Companies are under external and internal pressure to adopt Corporate Social Responsibility (CSR) practices. Positive and significant results of the relationship between CSR and financial performance are not always confirmed in empirical studies, demonstrating, thus, no consensus has been achieved in CSR literature yet. Thereby, we seek to understand the influence of capital structure on the performance of CSR practices, since there is a theoretical omission about intangible attributes. We formulated three hypotheses about the relationship between CSR and: the capital structure (H1); the debt financing (H1a); and the shareholder’s equity (H1b). We used a sample of 1,642 publicly traded companies on the 10 highest GDP countries. Using GMM 2SLS estimator, the results reveal positive and significant relationship between shareholders’ equity and CSR, while for the relationship between debt financing and CSR shown a negative and significative correlation. Our findings suggest that companies with higher scores of CSR tend to finance itself through equity. We found differences between countries related to the Capital Structure volume required to achieve a CSR positive index. Our findings provoke further debate concerning the reasons that conduct organizations to adopt such practices and foster new discussions about the aspects that involve social practices responsible adoption in companies.

scholarly journals Analisis Finansial Distress Untuk Memprediksi Risiko Kebangkrutan Perusahaan Sub Sektor Energi

2021 ◽  
Vol 4 (2) ◽  
pp. 764-770
Author(s):  
Pauline Cielo ◽  
Gusganda Suria Manda
Keyword(s):  
Financial Distress ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Z Score ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Safe Area ◽  
Score Method ◽  
Quantitative Descriptive ◽  
Research Period

This study aims to determine and analyze the financial performance of the energy sub-sector using the Almant Z-Score method. This research is a quantitative descriptive study. The population in this study are energy sub-sector companies listed on the Indonesia Stock Exchange 2015-2019. The sample in this study amounted to 4 energy sub-sector companies, namely PT. Perusahaan Gas Negara, PT. Leyand International, PT. Rukun Raharja, and PT. Mitra Energi Persada. The sampling technique in this study was using purposive sampling technique. The results of the financial distress predictions for the energy sub-sector companies, amounting to 4 publicly traded companies during the 2015 to 2019 research period using the Altman Z-Score method. This results in three companies in financial distress and one company in a safe area. Keywords: Finansial Distress, Bankrupty, Energy Sub-sector

scholarly journals Rethinking the Income Inequality and Financial Development Nexus. A Study of Nine OECD Countries

2020 ◽  
Vol 12 (13) ◽  
pp. 5449
Author(s):  
Marta de la Cuesta-González ◽  
Cristina Ruza ◽  
José M. Rodríguez-Fernández
Keyword(s):  
Income Inequality ◽  
Global Financial Crisis ◽  
Panel Data Analysis ◽  
Oecd Countries ◽  
Explanatory Variables ◽  
Financial Variables ◽  
Financial Depth ◽  
Sustainable Finance ◽  
The Global Financial Crisis ◽  
The Relationship

Sustainable finance seeks to increase the contribution of finance to sustainable and inclusive growth. The global financial crisis of 2008 provoked the return of inequality in advanced countries to levels typical of a century ago. The aim of this paper is to empirically analyze the relationship between finance and income inequality for a group of nine OECD countries over the pre-crisis and post-crisis periods (2000–2015). The model proposed in this study simultaneously considers two explanatory variables for measuring financial depth (credit provision and capital markets) and a new multidimensional variable to measure the financial system’s resilience (a composite indicator), and conducts panel data analysis. The empirical results confirm that in terms of financial depth, the "too much finance hypothesis" holds. We also find that financial system’s resilience helps alleviate existing income inequality and that income inequality appears higher in liberal market economies than in coordinated economies. These results encourage policymakers to look beyond traditional public redistribution interventions and to pay attention to other financial variables related to the financialization process, the behavior of financial intermediaries, and the specific environment in which they operate.

scholarly journals The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries

2016 ◽  
Vol 27 (70) ◽  
pp. 29-42 ◽  
Author(s):  
Alessandra Vieira Cunha Marques ◽  
Patrícia de Souza Costa ◽  
Pablo Rogers Silva
Keyword(s):  
Latin American ◽  
Fixed Effects ◽  
Balance Sheet ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Future Earnings ◽  
Different Types ◽  
Future Income ◽  
The Relationship ◽  
Latin American Countries

This study aims to investigate whether the different types of book-tax differences are useful for predicting the future income of publicly traded companies in five Latin American countries. This is possible since these differences convey information about transitory components of income, which can be used by investors for predicting future income. However, little is known about the relationship between tax variables and companies' future results. The sample analyzed here is composed of 580 publicly traded companies from five Latin American countries (Argentina, Brazil, Chile, Mexico, and Peru) with information available in the Economatica(r) database covering 2002 to 2013. In terms of methodology, regressions are employed in order to find a connection between the different types (total, permanent, temporary, and the negative and positive variations) of book-tax differences and companies' current and future earnings per share, as well as some control variables suggested by previous literature. The model's coefficients were estimated through panel data techniques: fixed effects. The results obtained suggest that the information gathered in the different types of book-tax differences (total, permanent, temporary, positive and negative variations) is relevant in predicting future income. Total, permanent and temporary differences contribute to the uncertainty in future income prediction, given that results are more transitory and less persistent in years with higher book-tax differences. Positive and negative variations, on the other hand, attribute higher income in coming years to greater variations in book-tax differences, representing increased timeliness of results and a reduction in off balance sheet funding for the publicly traded companies from these countries.

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