COVID-19 has slowed down the global economic activity which is expected to turn into an economic recession, where firms are expected to experience financial distress leading to corporate defaults. Predicting such defaults is important to safeguard stakeholders’ interest in financial markets. This study has estimated extent of financial distress among firms listed at PSX and constituting KSE 30 index, by using Altman’s Z-Score. The score has been computed using financial statements of 2019-20, and on proforma financial statements for 2020-21 2019-20, considering these financial years as pre and post COVID-19 closing dates respectively for financial statements. The proforma financial statements have been drawn for financial 2020-21 2019-20 using established accounting conventions of prudence, conservatism, substance over form, ad foreseeable future. The results of Z-score in pre and post COVID-19 have been compared to assess the change in degree of financial distress among the selected firms. A significant increase in the degree of financial distress has been observed, which may lead to an increased number corporate default for the firms listed at PSX. Suggestion have been made to the firms and corporate regulators to curtail the rate of corporate defaults, along with limitation of this study and areas of future research.
This study investigates the impact of Corporate Governance on Firm Performance. The corporate governance has been operationalized through eight indicators including the Board Size, Ownership Structure, CEO Duality, Independence of Audit Committee, Firm Size, Firm Age, Firm Leverage, and Firm Growth, while the Firm performance has been factored into Return on Assets, and Return on Equity. Pakistan stock exchange has been used as the unit of analysis, taking 100 public listed firms from the non-financial sector, as the sample. Data around the study variables have been collected and analyzed for a period of 10 years, i.e., 2013-2022, using suitable statistical tools. The findings reveal that lean board size, moderate leverage, CEOs serving on various boards, high independence on audit committees, large firm size, young firms, and sustainable growth positively impact the firm performance. High leverage has been found to have an adverse impact on firms’ profitability, especially in the wake of high interbank offered rates. These findings are important the practitioners, corporate regulators, and researchers. Future studies are recommended to take more indicators from the corporate governance index into account for understanding their impact on firm performance.
Anticipation of the key reversal points in trading markets is of key interest to the portfolio managers, investors, researchers, technical Analysts. These points trigger investment or divestment for investors’ holdings within the financial markets. Many techniques are used to anticipate these points. Use of Fibonacci numbers has gained significant importance in this context. The tools like ‘Fibonacci Retracements’ are available to investors; however, another important determinant in the value of an investment is the ‘timings’ within a certain time frame. This study aims to understand whether such a predictive relationship exists between the Fibonacci time horizons and the modern-day financial markets. For this purpose, two renowned indices i.e., Dow Jones Industrial Average (DJIA) and Dow Jones Transport Average (DJTA) have been taken as the population. Data of these averages, since their inception in 1896, till 2020, has been taken in to account, in order to remove any speculative sentiments, in the long run. The observation periods of data have been classified into daily, monthly and yearly time frames. Charting package, ‘meta stocks’ version 8.0 has been used to map the Fibonacci sequence against the actual reversal points placed on the data from the first day of trading on DJIA and DJTA. The results reveal striking similarity between the reversal points inferred from Fibonacci sequence, and the actual reversal points. The study concludes with a recommendation to trace this similarity against the technical analysis and charting for further investigation by the future studies. These findings are of significant importance for the portfolio managers, technical analysists, and researchers interested in forecasting the movement of the market index.
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