Modeling of Financial Distress Probability for Vietnamese Listed Companies

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.

scholarly journals Factors Influencing Auditor Independence among Listed Companies in Nigeria: Generalized Method of Moments (GMM) Approach

2017 ◽  
Vol 9 (8) ◽  
pp. 191 ◽  
Author(s):  
Mary Kehinde Salawu
Keyword(s):  
Method Of Moments ◽  
Stock Exchange ◽  
Generalized Method Of Moments ◽  
Secondary Data ◽  
Audit Fees ◽  
Listed Companies ◽  
Positive Influence ◽  
Auditor Independence ◽  
Financial Reports ◽  
Factors Influencing

The study examines the factors influencing auditor independence among listed companies in Nigeria. A sample of 65 firms out of the 194 listed on the Nigerian Stock Exchange (NSE) were purposively selected for analysis, these comprise 14 money deposit banks (financial), 1 mortgage bank and 50 non-financial firms. Secondary data were employed for the study and were sourced from the audited financial reports of sampled companies and fact book of the Nigerian Stock Exchange between the periods of 2006 and 2013. Data were analysed using descriptive statistics and Generalised Method of Moments (GMM). Preliminary tests were carried out such as Sargan test, Arellano-Bond Serial Correlation Test among others. The study revealed that Big4, audit tenure, profitability, leverage and inventory with account receivable had negative significant impact, which can impair auditor independence, while size of the firms and loss had positive influence on auditor independence in Nigeria. Also, the square root of the number of subsidiaries was positively related to auditor independence, but not significant and the total number of subsidiaries had positive influence on auditor independence but not significant. These results implied that the two variables can increase the complexity of the audit and, consequently, a rise in audit fees expect in their presence. This will in turn reduce auditor independence. The study therefore recommended that joint audit be adopted and audited tenure be reviewed. The findings of the study would enable management, regulators, investors and other stock market participants to play their unique and important roles in enhancing auditor independence in Nigeria.

scholarly journals Exploring the internal factors influencing financial distress

Accounting ◽  
2021 ◽  
pp. 791-800
Author(s):  
Kuat Waluyo Jati ◽  
Linda Agustina ◽  
Muhammad Ihlashul Amal ◽  
Indah Fajarini Sri Wahyuningruma ◽  
Zulaikha Zulaikha
Keyword(s):  
Firm Size ◽  
Financial Distress ◽  
Random Sampling ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Institutional Ownership ◽  
Internal Factors ◽  
Industrial Companies ◽  
Factors Influencing

This study aims to examine the effects of different factors influencing on financial distress. The population of this study includes industrial companies listed on the Indonesia Stock Exchange. Samples were processed by choosing 69 companies for three years of information which leaves us to have 150 observations. The sampling technique uses purposive random sampling and data is analyzed using PLS. The results show that firm size and liquidity negatively affect the financial distress while leverage positively affects the financial distress. In addition, institutional ownership moderates liquidity towards financial distress, firm size negatively affects liquidity, and liquidity does not mediate the effect of firm size on financial distress. The conclusion of this research is that management teams can avoid financial distress if they are able to manage liquidity ratios and leverage well, both ratios must be maintained so that they would not exceed firms’ financial abilities. Companies with big amount of total assets have an advantage in competition since it is not overshadowed by the condition of financial distress and they can easily gain stakeholders’ confidence. Institutional ownership in this study seems to encourage management to take risks related to company liquidity to generate profits by utilizing long-term debt in financing its operations.

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

2010 ◽  
Vol 13 (01) ◽  
pp. 19-43 ◽  
Author(s):  
Gili Yen ◽  
Jian-Fa Li
Keyword(s):  
Empirical Evidence ◽  
Financial Distress ◽  
Stock Price ◽  
Listed Companies ◽  
Shareholder Wealth ◽  
Mode Change ◽  
Asset Value ◽  
Cash Transaction ◽  
Financially Distressed

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.

The effect of financial distress costs on ownership structure and debt policy

2017 ◽  
Vol 36 (10) ◽  
pp. 1216-1229 ◽  
Author(s):  
Mahdi Salehi ◽  
Afsaneh Lotfi ◽  
Shayan Farhangdoust
Keyword(s):  
Ownership Structure ◽  
Financial Distress ◽  
Institutional Environment ◽  
Stock Exchange ◽  
Listed Companies ◽  
Convincing Evidence ◽  
Corporate Debt ◽  
Least Squares Regression ◽  
Content Type ◽  
Debt Policy

Purpose The purpose of this paper is to examine the effect of financial distress costs, corporate growth rate, and flexibility on the interaction between ownership structure and corporate debt policy. Design/methodology/approach The authors test the hypotheses by employing simultaneous equations system methodology with two-stage least squares regression and panel data technics on a sample of 786 listed companies on the Tehran Stock Exchange during 2010-2015. Findings The results indicate that there is a positive and significant relationship between corporate debt level and managerial ownership in the Iranian listed companies. The authors also find no convincing evidence that either the firm’s growth or financial health could influence or moderate this interrelationship. Research limitations/implications The implications drawn from this study are constrained by two primary limitations. First, the present study is conducted in an Iranian setting; therefore, the data utilized for the study only contain companies listed on the Tehran Stock Exchange. The utilization of listed companies on the Tehran Stock exchange is likely to affect the generalizability of the study in a national context. Second, the authors were unable to extend the sample time period due to some major deficiencies in the Tehran Stock Exchange library and its supplementary software. Social implications Since the fundamental institutional assumptions underpinning the western and even East Asia capital structure models are not valid in the institutional environment of Iran, the findings could provide substantial implications for our understanding of capital structures as well as debt policy literature. Originality/value This is an innovative research in terms of the mutual relationship between debt and ownership structure and the use of equations system to measure the interaction between them.

scholarly journals The Impact of Corporate Governance on the Financial Distress: Evidence from Pakistani Listed Companies

2017 ◽  
Vol 5 (2) ◽  
pp. 49-53
Author(s):  
Ahmed Hassan Jamal ◽  
◽  
Syed Zulfiqar Ali Shah ◽  
Keyword(s):  
Corporate Governance ◽  
Financial Distress ◽  
Audit Committee ◽  
Positive Impact ◽  
Stock Exchange ◽  
Listed Companies ◽  
Board Composition ◽  
Explanatory Variables ◽  
Governance Practices ◽  
The Impact

This study intends to assess how corporate governance affects the financial distress in non-financial listed companies in Pakistan. Sample of 53 companies was obtained from non-financial institutes listed in Pakistani stock exchange. Regression analysis is used to estimate the impact of explanatory variables including size of board, composition of board, audit committee independence and duality of CEO on the financial distress. The findings show that size of board, composition of board and CEO duality has a positive impact on Z-score of Pakistani listed firms. This implies that better the corporate governance practices in companies, lower will be the financial distress and vice versa.

scholarly journals Is conditional conservatism a source of deviations of financial statements from Benford's Law?

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tri Tri Nguyen ◽  
Chau Minh Duong ◽  
Nguyet Thi Minh Nguyen
Keyword(s):  
Financial Distress ◽  
Stock Exchange ◽  
Listed Companies ◽  
Financial Statement ◽  
Benford’S Law ◽  
Assessment Procedure ◽  
Specific Level ◽  
Content Type ◽  
Conditional Conservatism ◽  
Benford's Law

PurposeIn this paper, the authors examine the association between conditional conservatism and deviations of the first digits of financial statement items from what are expected by Benford's Law.Design/methodology/approachThis research uses data of companies listed on the London Stock Exchange. The authors measure deviations of first digits from Benford's Law following Amiram et al. (2015) and firm-year conditional conservatism following previous studies (Basu, 1997; Khan and Watts, 2009; García Lara et al., 2016). The authors use multiple regressions to provide evidence for their hypothesis.FindingsThe results show that conditional conservatism is positively associated with deviations from Benford's Law. The findings are robust across different measures of deviations and conditional conservatism. Also, the authors find that the relationship between deviations from Benford's Law and conditional conservatism is more pronounced for firms with debt issuance, and for leveraged firms facing financial distress. Next, the authors’ analyses confirm previous evidence by showing that the first digits of financial statement items of UK listed companies conform to Benford's Law at the firm-specific level and the market level, and deviations of income statements are larger than those of balance sheets and cash flow statements.Research limitations/implicationsThe research makes significant contributions to the literature. First, this is the first study that provides empirical evidence suggesting that conditional conservatism may be a source of deviations from Benford’s Law. Second, the authors provide evidence confirming previous US findings (e.g. Amiram et al., 2015) showing that the distributions of first digits of financial statement items of UK listed companies also conform to Benford's Law.Practical implicationsThe authors’ findings have implications for auditors. Auditors should be aware of “false positive” for material misstatements when using Benford's Law as a risk assessment procedure. While both conditional conservatism and earnings management are related to deviations from Benford's Law, conservatism-related biases could indicate less audit risks.Originality/valueThe authors provide new and original evidence suggesting that conditional conservatism is related to deviations from Benford's Law.

ANALISIS FINANCIAL DISTRESS DAN PENGARUHNYA TERHADAP RETURN SAHAM PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA

2019 ◽  
Vol 7 (4) ◽  
Author(s):  
SISCA KRISTANTI B2042141020
Keyword(s):  
Social Sciences ◽  
New York ◽  
Empirical Evidence ◽  
Market Economy ◽  
Financial Distress ◽  
Stock Exchange ◽  
Emerging Market ◽  
Z Score ◽  
Factors Influencing ◽  
Altman Model

Kebangkrutan merupakan masalah yang sangat perlu yang diwaspadai oleh perusahaan. Perusahaan yang mengalami kebangkrutan tentunya akan memberikan dampak negatif pada stakeholder perusahaan. Sebelum kebangkrutan itu terjadi, perusahaan mengalami kondisi financial distress atau kondisi dimana keuangan perusahaan dalam keadaan tidak baik yang menjadi indikator awal terjadinya kebangkrutan. Tujuan penelitian ini adalah menganalisis potensi kebangkrutan pada perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia periode 2012-2016 berdasarkan model Z-Score Altman dan Springate serta pengaruhnya metode Z-Score Altman dan Springate terhadap return saham perusahaan. Sampel yang digunakan dalam penelitian ini 10 perusahaan manufaktur. Analisis yang digunakan adalah analisis deskripstif dan analisis regresi linier berganda dengan menggunakan perangkat lunak SPSS. Hasil prediksi financial distress menggunakan metode Altman Z-Score dan Springate terdapat dua perusahaan yang berada pada financial distress yaitu PT Semen Holcim serta PT. Tirta Mahakam Resources Tbk. Metode altman z-score tidak berpengaruh sedangkan springate berpengaruh positif terhadap return saham perusahaan Manufaktur yang terdaftar di Bursa Efek Indonesia tahun 2012-2016 Kata kunci : kebangkrutan, manufaktur, altman z-score dan springateDAFTAR PUSTAKA Adnan, A.M. 2001. Analisis Ketepatan Prediksi Metode Altman Terhadap Terjadinya Likuidasi pada Lembaga Perbankan (Kasus Likuidasi Perbankan di Indonesia). dalam JAI Volume 5 No. 2. Jakarta. Jurnal Akuntansi Indonesia Adnan, M.A dan, Kurniasih, E. 2000. Analisis Tingkat Kesehatan Perusahaan Untuk Memprediksi Potensi Kebangkrutan Pada Penekatan Altman (Kasus Pada Sepuluh Perusahaan Di Indonesia), Jurnal Akuntansi Dan Auditing Indonesia, 4 (2), 131-149. Alifiana, M. A Dan  N. R Arumsari., 2017. Analisis Kinerja Bank Badan Usaha Milik Negara  Berdasar Metode Altman Dan Return Saham  Studi Pada Pt Bank Negara Indonesia (Persero) Tbk.  PROSIDING SNATI F Ke-4 Tahun 2017 ISBN: 978-602-1180-50-1 Altman, 2002. Corporate Financial Distress. John Wiley & Sons, 1983. New York. Fakhrurozie, 2007, Analisis Pengaruh Kebangkrutan Bank Dengan Metode Altman Z-Score Terhadap Harga Saham Perusahaan Perbankan Di Bursa Efek Jakarta. Skripsi.  Semarang . Universitas Negeri Semarang, Hanafi, H. M. dan H. Abdul. 1996. Analisa Laporan Keuangan. UPP-AMP YKPN. Yogyakarta. Marcelina . T. A Dan W.S Yuliandhari, 2014. Prediksi Kebangkrutan Menggunakan Metode Z-Score Dan Pengaruhnya Terhadap Harga Saham Pada Perusahaan Transportasi Yang Terdaftar Di Bursa Efek Indonesia Tahun 2008-2012. E-Proceeding Of Management : Vol.1, No.3 Desember 2014 | Page 291 Munawir, S 2001. Analisa Laporan Keuangan. Liberty. Yogyakarta Munawir, S 2002. Analisa Laporan Keuangan. UPP AMP YKPN. Yogyakarta Muslich, M. 2000. Manajemen keuangan Modern. Rineka Cipta. Jakarta. Nur Fadli Andriawan, N.F Dan D Salean., 2016. Analisis Metode Altman Z-Score Sebagai Alat Prediksi Kebangkrutan Dan Pengaruhnya Terhadap Harga Saham Pada Perusahaan Farmasi Yang Terdaftar Di Bursa Efek Indonesia.  Jurnal Ekonomi Akuntansi, Hal 67 – 82 Volume 1, Nomor 1, April 2016 Platt, H., dan M. B. Platt. 2002. Predicting Financial Distres. Journal of Financial Pranowo. 2010. “The Dynamics of Corporate Financial Distress in Emerging Market Economy: Empirical Evidence from the Indonesian Stock Exchange 2004-2008”. European Journal of Social Sciences Vol 16 Number I, 138-149. Purwanti, E., 2016. Analisis Perbedaan Model Altman Z Score Dan Model Springate Dalam Memprediksi Kebangkrutan Pada Perusahaan Pertambangan Di Indonesia (Studi Empiris Pada Perusahaan Pertambangan Yang Terdaftar Pada Bursa Efek Indonesia Tahun 2010-2014). Jurnal STIE Semarang, Vol 8, No 2, Edisi Juni 2016 (Issn : 2252-826) Sukana. 2008. Factors Influencing Financial Distress and Bankruptcy Risks. Universitas Padjajaran, Bandung. Syamsul, H Dan Atika, A. 2008. Pemilihan Prediktor Delisting Terbaik (Perbandingan Antara The Zmijewski Model, The Altman Model, Dan Springate Model). Thesis. Jakarta. Universitas Islam Indonesia. Weston, F.J. 1997. Manajemen Keuangan. Erlangga. Jakarta

Alternative risk-based levies in the pension protection fund for multi-employee schemes

2009 ◽  
Vol 8 (4) ◽  
pp. 451-483 ◽  
Author(s):  
WEIXI LIU ◽  
IAN TONKS
Keyword(s):  
Steady State ◽  
Financial Distress ◽  
Logit Model ◽  
Initial Phase ◽  
Distress Risk ◽  
Pension Schemes ◽  
Financially Distressed ◽  
Last Man

AbstractThis paper estimates the risks of financial distress in UK universities, and uses these estimates to examine the basis of the annual levies paid to the UK's Pension Protection Fund by the Universities Superannuation Scheme, a multi-employer scheme covering 391 universities and related institutions. The paper compares the payments between the two alternative participating arrangements for multi-employer pension schemes to the PPF, namely last-man-standing and segmented levies. Using an Ohlson (1980) logit model to predict the financial distress risk for HE institutions, we find that financially distressed institutions are smaller, with higher leverage and lower earnings. By comparing the implied financial distress probabilities from the PPF risk-based levy using USS accounts with the simulated probabilities using our logit model, we estimate whether USS levies are fairly priced. Our estimates suggest that in 2006/07 USS member institutions appeared to be paying less than the fair risk-based levy. However, this is because during the initial phase of the PPF the risk-based levies were much lower as a proportion of the total levy than the intended steady-state values. The implication is that if USS had paid the same total levy but where the risk-based component was four fifths of the total, then USS would have been paying substantially more than its fair risk-based levy. In addition, by looking at the distributions of individual university risk-based levies under a segmented PPF arrangement, we find evidence of significant cross-subsidies under the current last-man-standing levy between participating USS institutions.

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