An Investigation of Thai Listed Firms' Financial Distress Using Macro and Micro Variables

Tirapat, Sunti; Nittayagasetwat, Aekkachai

doi:10.17578/3-2-2

Cited by 47 publications

(36 citation statements)

References 32 publications

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“…Consequently, higher the sensitivity of a firm to this variable, lower would be the probability of default. The results are, however, inconsistent with Tirapat and Nittayagasetwat (1999), who find a significant positive relationship between CPI sensitivity or sensitivity to inflation and the probability of distress. The classification matrix for the model using logistic regression is reported in Table VI.…”

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confidence: 91%

“…Money supply also affects the probability of default by way of changes in the liquidity conditions in the economy (Tsai et al, 2009). Tirapat and Nittayagasetwat (1999) argue that higher the firm's sensitivity to economic shocks, the more vulnerable it is to experiencing financial distress. Hence, the present study incorporates the impact of macroeconomic variables on the default risk of firms in the form of sensitivity of each firm to changes in the respective macroeconomic variables.…”

Section: Variable Descriptionmentioning

confidence: 99%

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Default risk modelling using macroeconomic variables

Agrawal

Maheshwari

2014

Journal of Indian Business Research

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2006),"Predicting probability of default of Indian corporate bonds: logistic and Z-score model approaches", If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -This paper aims to find out significant macroeconomic variables, incorporated as sensitivity variables (macroeconomic sensitivities), affecting financial distress for a sample of listed Indian firms. Design/methodology/approach -The study uses a matched pair sample of defaulting and non-defaulting listed Indian firms. It uses two alternative statistical techniques, viz., logistic regression and multiple discriminant analysis. The macroeconomic sensitivities are estimated by regressing the monthly stock return of the individual firm on the monthly changes in each macroeconomic variable. Findings -Sensitivity to changes in the stock market (stock market sensitivity) and sensitivity to changes in inflation [Consumer Price Index (CPI) sensitivity] have a significant impact on the default probability of a firm. Stock market sensitivity has a significant positive relationship with the probability of default, and CPI sensitivity has a significant negative relationship with the probability of default. Originality/value -The study links the developments in the external environment to the firm's susceptibility to default. Furthermore, it highlights the significance of sensitivity of a firm to uncertainties in the macroeconomic environment and its impact on default risk. This establishes the fact that each firm is uniquely affected by the changes in the overall macroeconomic environment. The findings could be valuable to lenders such as banks and financial institutions, investors and policymakers.

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confidence: 91%

Section: Variable Descriptionmentioning

confidence: 99%

Default risk modelling using macroeconomic variables

Agrawal

Maheshwari

2014

Journal of Indian Business Research

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“…Several studies have explained that the indication of the company is experiencing financial distress, including: (a) Whitaker (1999), if the company in a few years experienced negative net operating profit; (b) Tirapat and Nittayagasetwat (1999), if the company discharged its operations over the authority of the government and the company should undertake restructuring planning; (c) Almilia (2003), the company has for several years experienced negative net operating income and for more than one year did not pay dividends.…”

Section: Financial Distressmentioning

confidence: 99%

The Structure of Good Corporate Governance and Financial Indicators as Predictor of Financial Distress in Mining Sector Company in Indonesia

Sumani¹

2019

RBM

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The purpose of the paper are: (1) to examine financial indicators, including: current ratio, return on assets, debt to assets ratio, and total asset turn over as a predictor of financial distress in mining sector companies in Indonesia; (2) to examine the structure of Good Corporate Governance including: independent commissioner, audit committee, board of directors, independent audit committee ratios with non-independent, and institutional ownership ratio with managerial ownership as predictor of financial distress in mining sector company in Indonesia. Type of research is quantitative explanatory research. Sampling technique is used purposive sampling method, as many as 20 companies in the mining sector in Indonesia. Analytical techniques in this study uses logistic regression. The results of the research show that: current ratio, debt to asset ratio, total asset turnover, and institutional ownership ratio with managerial ownership are not predictors of financial distress in mining sector in Indonesia. However, return on Assets, independent commissioners, audit committees, boards of directors and independent audit committee ratios with non-independent are predictors of financial distress in mining companies in Indonesia.

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“…González-Hermosillo (1999) proposes a list of early-warning indicators for U.S. banking problems that include low capital equity and low reserve coverage ratio. Tirapat and Nittayagasetwat (1999) analyzed financially distressed and non-distressed firms (not banks) in Thailand in 1996. The results showed that firms' expected returns were related to failure and were depressed by inflation.…”

Section: Prior Researchmentioning

confidence: 99%

Banking crisis in east asia: A micro/macro perspective

Suetorsak

2006

Rev Quant Finan Acc

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This paper examines interactions between micro and macro variables in explaining the risk positions adopted by East Asian banks. The analysis shows that macroeconomic policies impacted the micro-economic decision making of banks in the period from 1989 to 1999. Considering the macroeconomic perspective side by side with the microeconomic perspective and including interactions between the two levels increases the explanatory power of the model and exposes ways in which macro conditions and government policies influenced banks’ reactions to their microeconomic variables and the level of risk they take. Copyright Springer Science + Business Media, Inc. 2006

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An Investigation of Thai Listed Firms' Financial Distress Using Macro and Micro Variables

Cited by 47 publications

References 32 publications

Default risk modelling using macroeconomic variables

Default risk modelling using macroeconomic variables

The Structure of Good Corporate Governance and Financial Indicators as Predictor of Financial Distress in Mining Sector Company in Indonesia

Banking crisis in east asia: A micro/macro perspective

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