Financial Distress Risk and Stock Price Crashes

2019 ◽  
Author(s):  
Christoforos Andreou ◽  
Panayiotis C. Andreou ◽  
Neophytos Lambertides
Keyword(s):  
Financial Distress ◽  
Stock Price ◽  
Distress Risk

Financial distress risk and stock price crashes

2021 ◽  
pp. 101870
Author(s):  
ChristoforosK. Andreou ◽  
Panayiotis C. Andreou ◽  
Neophytos Lambertides
Keyword(s):  
Financial Distress ◽  
Stock Price ◽  
Distress Risk

scholarly journals THE IMPACT OF DIVIDEND POLICY, FINANCIAL DISTRESS RISK AND CORPORATE GOVERNANCE TOWARD STOCK PRICE

2021 ◽  
Vol 3 (2) ◽  
pp. 85-106
Author(s):  
Ivan Wiyogo ◽  
Frinan Satria
Keyword(s):  
Corporate Governance ◽  
Financial Distress ◽  
Stock Price ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Total Sample ◽  
Distress Risk ◽  
Stock Investment ◽  
The Impact

Stock investment is emerging in this era. The market on stock investment will be predicted to grow every year. Stock price is defined by offer and bid price. With this term use in Indonesia Stock Exchange, it makes people hard to guess on what will be the opening price tomorrow as asking price and bidding price need to reach an agreement. This research will investigate the impact of Dividend Policy, Financial Distress Risk, and Corporate Governance as the independent variables toward Stock Price. This research is conducted by using quantitative research method using secondary data that were taken from the LQ45 companies which are listed in Indonesian Stock Exchange with the population of 61 companies. The samples are obtained using purposive sampling method. The total sample is 42 companies from the year 2017-2019. The data analysis is using multiple linear regression analysis. Based on the results of research and analysis by using SPSS 25 indicate that: Dividend per share (dividend policy) and corporate governance have significant impact toward stock price while dividend payout ratio (dividend policy) and distress risk does not have significant impact toward stock price. It is concluded that the impact of dividend policy, financial distress risk and corporate governance is only 29.2% as the rest is impacted by other variables.  

Does Financial Distress Using Altman Z-Score Capital Affect Stock Price?

2020 ◽  
Vol 24 (02) ◽  
pp. 3127-3134
Author(s):  
Sakina Ichsani ◽  
Vincentia Wahju Widajatun ◽  
Dede Hertina
Keyword(s):  
Financial Distress ◽  
Stock Price ◽  
Z Score

Operational Risk, Financial Distress Risk and Equity Returns

2011 ◽  
Author(s):  
Ramya Rajajagadeesan Aroul ◽  
Mishuk Chowdhury ◽  
Peggy E. Swanson
Keyword(s):  
Financial Distress ◽  
Operational Risk ◽  
Equity Returns ◽  
Distress Risk

Capital Market Imperfections and the Sensitivity of Investment to Stock Prices

2009 ◽  
Vol 44 (3) ◽  
pp. 551-578 ◽  
Author(s):  
Alexei V. Ovtchinnikov ◽  
John J. McConnell
Keyword(s):  
Capital Markets ◽  
Stock Prices ◽  
Financial Distress ◽  
Stock Price ◽  
Debt Overhang ◽  
Capital Market Imperfections ◽  
Investment Opportunities ◽  
Imperfect Capital Markets ◽  
Empirical Tests ◽  
External Equity

AbstractPrior studies argue that investment by undervalued firms that require external equity is particularly sensitive to stock prices in irrational capital markets. We present a model in which investment can appear to be more sensitive to stock prices when capital markets are rational, but subject to imperfections such as debt overhang, information asymmetries, and financial distress costs. Our empirical tests support the rational (but imperfect) capital markets view. Specifically, investment–stock price sensitivity is related to firm leverage, financial slack, and probability of financial distress, but is not related to proxies for firm undervaluation. Because, in our model, stock prices reflect the net present values (NPVs) of investment opportunities, our results are consistent with rational capital markets improving the allocation of capital by channeling more funds to firms with positive NPV projects.

Are Firms with Negative Book Equity in Financial Distress?

2015 ◽  
Vol 18 (03) ◽  
pp. 1550016 ◽  
Author(s):  
Tze Chuan Chewie ANG
Keyword(s):  
Failure Rate ◽  
Financial Distress ◽  
Operating Performance ◽  
Large Magnitude ◽  
Small Magnitude ◽  
First Report ◽  
Distress Risk ◽  
Financial Characteristics ◽  
And Control ◽  
Negative Earnings

This study examines whether negative book equity (BE) firms are in financial distress by analyzing their operating performance, financial characteristics, distress risk, and survivability when they first report negative BE. Firms with small magnitude of negative BE (SNBE firms) suffer from persistent negative earnings and financial distress, while firms with large magnitude of negative BE (LNBE firms) experience a temporary non-distress related earnings shock. LNBE firms report consecutive years of negative BE, but have lower distress risk and failure rate than both SNBE and control firms. However, all negative BE stocks have abysmal returns subsequent to their first report of negative BE.

scholarly journals EVENT RISK COVENANTS, DESIGN PARAMETERS AND AGENCY ISSUES: A COMPARATIVE STUDY OF HIGH YIELD VERSUS INVESTMENT GRADE BONDS

2018 ◽  
Vol 19 (0) ◽  
pp. 331-341 ◽  
Author(s):  
Manish Tewari
Keyword(s):  
Financial Distress ◽  
Stock Price ◽  
Agency Cost ◽  
High Yield ◽  
Design Parameters ◽  
Growth Options ◽  
Managerial Entrenchment ◽  
Event Risk ◽  
Call Protection ◽  
Investment Grade

We analyse security design parameters of 1,115 high yield (HY) and investment grade (IG) event risk covenants (ERC) protected issues between 1986 and 2012 from the agency conflict perspective. We find positive and significant stock price reaction to the issuance of HY but not the IG issues. Although, majority of these issues carry a call provision, we find significant design differences in the call provision between HY and IG issues. We find that HY issues provide strong call protection to mitigate the risk of a call due to ratings upgrade, compromising firm’s financial flexibility; resulting financial distress is mitigated by the ERC. IG issues provide weak call protection to fully exploit growth options however, role of ERC is not apparent. We also find evidence of increase in managerial entrenchment due to the presence of ERC in HY firms however, reduction in agency cost of debt supersedes cost of managerial entrenchment.

scholarly journals Does corporate social responsibility reduce financial distress risk?

2020 ◽  
Vol 91 ◽  
pp. 835-851 ◽  
Author(s):  
Sabri Boubaker ◽  
Alexis Cellier ◽  
Riadh Manita ◽  
Asif Saeed
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Distress ◽  
Distress Risk ◽  
Corporate Social

scholarly journals The Effect of Financial Performance and Financial Distress Indicators to the Stock Price of Bank Rakyat Indonesia

2018 ◽  
Vol 2 (1) ◽  
pp. 1-15
Author(s):  
Diin Fitri Ande ◽  
Harsono Yoewono
Keyword(s):  
Financial Performance ◽  
Financial Distress ◽  
Stock Price ◽  
Time Lag ◽  
Bankruptcy Prediction ◽  
Third Party ◽  
Financial Reports ◽  
Financial Report ◽  
Equity Ratio ◽  
The Common

The bank’s financial report is the only lead for the public c to review, evaluate, and assess the soundness of a bank. By tinkering the available figures within the monthly financial reports, we have measured 52 variables comprised of the common indicators to calculate the effects of financial performance of the bank, its financial distress, to its stock price in the market. The common indicators used are the ratios of liquidity, rentability, and solvability. The bankruptcy prediction and financial distress indicators were considered to part ofthe solvability ratios. The data observed and collected was between January 2002 to 18 July 2017. The time lag and IPO as of 10 November 2003 reduced the eligibility of monthly financial reports, leaving the data usable for the period of November 2003 to April 2017. As 10 variables were excluded by the system, only 4 of42 variables were found to be significantly affecting the stock price variable. The 4 independent variables are market capitalization, the ratio of placement in BI to the third-party fund, debt to equity ratio, and debtto asset ratio.

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