Factors affecting financial distress: The case of Malaysian public listed firms

Thim, Chan Kok; Choong, Yap Voon; Nee, Chai Shin

doi:10.22495/cocv8i4c3art3

Cited by 35 publications

(59 citation statements)

References 30 publications

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“…The failure of firm in meeting their obligation as at when due usually result in such firm becoming financial distressed. The result is in support with the research findings of Elloumi and Gueyee (2001), McEwen (2001), Abdulla (2006, and Thim et al (2011) who found that liquidity has a negative link with financial distress.…”

Section: Resultssupporting

confidence: 91%

“…Research findings by Tesfamariam (2014) revealed that there is an existence of a positive link between profitability and financial distress. Similar finding was also found by Ikpesu and Eboiyehi (2018) while studies by Thim et al (2011) revealed that profitability negatively affects financial distress. Research work of Baimwera and Murinki (2014) indicates that profitability negatively affects financial distress.…”

Section: Profitabilitysupporting

confidence: 86%

“…Research findings by Chancharat (2008) revealed that the likelihood of financial distress is expected to increase when firm size rises. Similarly, Parker et al (2002) and Thim et al (2011) research findings all indicate that the link between firm size and financial distress is positive. These findings were also supported by the research work of Parker et al (2002), Rath (2008) and Tesfamariam (2014).…”

Section: Firm Sizementioning

confidence: 77%

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Firm specific determinants of financial distress: Empirical evidence from Nigeria

Ikpesu¹

2019

J. Account. Taxation

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This paper in an attempt in answering the basic research question on what actually determines financial distress of firms in the manufacturing sector in the country employed the fully modified ordinary least square (FMOLS) on annual time series data of eighteen listed manufacturing firms on the Nigeria stock exchange (NSE) which was obtained from their audited financial statement. The endogenous variable used in the study is financial distress which is measured using the Altman Z score while the exogenous variables employed in the study are firm size, liquidity, profitability, and leverage. The study also employed a list of control variables such as revenue growth and share price. Findings from the study showed that leverage, liquidity, profitability, firm size, revenue growth, and share price are the firmspecific determinant of financial distress of firms in the manufacturing sector in the country. The findings of this study pose significant policy directions. First, managers and owners of the corporate organization need to pay critical attention to these variables when making financial decisions. Second, to ensure smooth operation and continued survival of firms, corporate managers need to design policies that will determine the appropriate level of liquidity, leverage, profitability and revenue growth. Also, management needs to set up control measures that will detect early warning signal of financial distress.

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Section: Resultssupporting

confidence: 91%

Section: Profitabilitysupporting

confidence: 86%

Section: Firm Sizementioning

confidence: 77%

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Firm specific determinants of financial distress: Empirical evidence from Nigeria

Ikpesu¹

2019

J. Account. Taxation

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“…The results of this study are in line with research by Ayu et al (2017), Andre and Taqwa (2014), Thim et al (2011), and Widarjo and Setiawan (2009). All three state that liquidity has no significant effect on financial distress.…”

Section: Effect Of Liquidity On Financial Distresssupporting

confidence: 93%

Investigating the Effect of Liquidity, Leverage, Sales Growth, and Good Corporate Governance on Financial Distress

Dianova¹,

Nahumury

2019

jasf

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Large companies may experience financial distress because of their inability to compete. Therefore, investors should be more vigilant in investing their funds. Some ways that can be done is through cash flow analysis, analysis of corporate strategy, and analysis of financial statements. This study aims to determine the effect of liquidity, leverage, sales growth, and good corporate governance on financial distress. The study used 55 samples of telecommunication and non-construction companies listed in Indonesia Stock Exchange period 2013-2017. The technique sampling in this study is the purposive sampling method. The data analysis method is PLS (Partial Least Square). The results of this study indicate that liquidity, leverage, sales growth, and good corporate governance do not affect financial distress. These unexpected results may due to the limitation of this study. Therefore, for future research in financial distress, it is suggested to take into account the sample size and other variables that expected to affect financial distress.

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“…Furthermore, the result showed that revenue growth affects corporate financial distress negatively. The implication of this is that firms with positive earnings growth employ less debt financing, hence they experience a lower level of financial distress (Thim et al, 2011). The study also revealed that firm's size affects corporate financial distress negatively which implies that large firms will experience a lower level of financial distress compared to smaller firms.…”

Section: Resultsmentioning

confidence: 86%

Capital structure and corporate financial distress of manufacturing firms in Nigeria

Ikpesu¹,

Osazemen²

2018

J. Account. Taxation

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This paper investigated the effect of capital structure on corporate financial distress of manufacturing firms in Nigeria by employing panel corrected standard error (PCSE) technique. The variables used in the study are corporate financial distress, capital structure, firm size, assets tangibility, revenue growth, profitability and age of firms. The outcome of the research reveals that capital structure affects corporate financial distress negatively while company age from listing years, profitability and asset tangibility affects corporate financial distress positively. The result further revealed that firm growth and firm size affects financial distress negatively. Policy implication from the study is that managers have to be cautious when designing their capital structure. Also, government should encourage firms to use internally generated fund than external fund by granting preferential tax treatment on their retained earnings. This will encourage investment in growth-oriented strategies. In addition, the Central Bank of Nigeria should direct banks to lower the cost of borrowing for manufacturing firms to ensure financial stability.

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Factors affecting financial distress: The case of Malaysian public listed firms

Cited by 35 publications

References 30 publications

Firm specific determinants of financial distress: Empirical evidence from Nigeria

Firm specific determinants of financial distress: Empirical evidence from Nigeria

Investigating the Effect of Liquidity, Leverage, Sales Growth, and Good Corporate Governance on Financial Distress

Capital structure and corporate financial distress of manufacturing firms in Nigeria

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