Financial ratios and corporate governance indicators in bankruptcy prediction: A comprehensive study

Liang, Deron; Lu, Chia Chi; Tsai, Chih‐Fong; Shih, Guan An

doi:10.1016/j.ejor.2016.01.012

Cited by 264 publications

(179 citation statements)

References 25 publications

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“…Darrat et al (2014) suggest that attributes of corporate governance, such as board characteristics, have more explanatory power than profitability or accounting ratio for predicting bankruptcy. Liang et al (2016) also suggest that bankruptcy prediction using corporate governance index and financial ratio better than using financial ratio alone.…”

Section: Hypothesis Development Type I Agency Conflict and Corporate mentioning

confidence: 99%

The Type I Versus Type II Agency Conflict on Earnings Management

Nurim

Sunardi

Raharti

2017

JDM

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This study aims to detect the background of earnings management behavior in which it shows the tendency of type I or II agency conflict. The high ownership concentration of firms in Indonesia leads type II agency conflict, but the good corporate governance formulation assumes conflict between management and shareholders. This study uses published data in IDX from [2009][2010][2011][2012][2013][2014]. TThe result reveals that reputation quality has negative significant correlation to earnings management behaviors, but corporate governance quality has insignificant correlation to earnings management, except percentage of independent commissioner board in moderate level. It has implication that management faces type II agency conflict. The majority may monitor management directly, so the finding reveals that independent commissioner board' s function is not optimum as part of corporate governance mechanism. According to the evidence, corporate governance formulation, especially in Indonesia, should be needed for reducing earnings management on type II tendency. Info Article

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Section: Hypothesis Development Type I Agency Conflict and Corporate mentioning

confidence: 99%

The Type I Versus Type II Agency Conflict on Earnings Management

Nurim

Sunardi

Raharti

2017

JDM

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“…The second dimension is Operational Performance (OPS), in which the objective is to measure the firms operating results, in regard to capital, however separating financial or equity influence. These are extracted from Financial Statements of the sample, however in the format of indicators, since they provide discriminatory power in comparison to monetary mass (Liang, Lu, Tsai & Shih, 2016). However, one must take into consideration that dimensionality adjustments have to be made to signal adequate positive or negative directional movement (Guyon & Eliseeff, 2003).…”

Section: Methodsmentioning

confidence: 99%

Relationship between competitiveness and operational and financial performance of firms: An exploratory study on the European brewing industry

Zanotti

Reyes

Fernández

2018

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Purpose: The purpose of this paper is to provide the underlying constructs that connect the operational and financial performance of firms with the competitive environment surrounding the brewing industry in Europe. Design/methodology:The selected method of study is exploratory and confirmatory factor analysis, and subsequently applying structural equations modelling. We have sampled 214 brewing companies distributed in over 12 European economies. Findings:The study provides a comparison between different antecent studies, including contextual contrast in both an industry and a methodologic perspective. The study shoes that the competitive construct of the industry is significantly related with the financial performance of firms, however not necesarilly to the operational results. Additionally, the operational structure of the firm does not necesarilly provide significant relationship to the firms' financial results. Research limitations/implications:The research is segmented within the European brewing industry, hence we find potentian geographic delimiations in terms of the conclusions of this paper.Originality/value: Significant relationships between competitive variables and financial performance in the brewing industry remains evasive in research thus far. Additionally, sustained in the potential the brewing industry represents within Europe, it is significant to identify these relationships for readers on both an academic and industrial background.

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“…A recent study combines Good Corporate Governance (GCG) with Financial Ratio (FR's) as the independent variables to predict financial distress. Liang et al (2016) in their study suggested that bankruptcy prediction model which combines between FR's and GCG is more accurate than the one which uses either FR's or GCG only.…”

Section: Introductionmentioning

confidence: 99%

“…1 year 1998 is a debtor who has two or more creditors and fails to pay at least one overdue debt and collectible, shall be declared bankrupt by authorized court decision either by his own request or by the request of one or more creditor(s). Liang et al (2016) suggested that bankruptcy or business failure of an enterprise brings a negative impact for both the entreprise and global economy. The impact of corporate bankruptcy for both local and global economy has led to the importance of accurate bankruptcy prediction models.…”

Section: Introductionmentioning

confidence: 99%

Financial performance, corporate governance, and financial distress

Ernawati¹,

Handojo²,

Murhadi³

2018

Proceedings of the 15th International Symposium on Management (INSYMA 2018)

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ABSTRACT:This study aims to analyze the effect of financial ratios and corporate governance on financial distress by making a prediction model of bankruptcy using data from non-financial sector companies listed on the Indonesia Stock Exchange (IDX). This research used the quantitative approach with a logistic regression model. The samples used in this study were 310 companies from the non-financial sector with 1550 observations. The research findings suggested that the variables included in the model are current liabilities to total assets, total liabilities to total assets, book-to-market value, blockholder ownership, sales to total assets, earnings before interest, and taxes to total assets. While the audit opinion variable has no significant effect. Although not all the variables which have been incorporated into the model were significant, the insignificant variables still remained in the model to improve the accuracy of the prediction model. The results suggested that the accuracy of this bankruptcy prediction model was 98.1%.

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Financial ratios and corporate governance indicators in bankruptcy prediction: A comprehensive study

Cited by 264 publications

References 25 publications

The Type I Versus Type II Agency Conflict on Earnings Management

The Type I Versus Type II Agency Conflict on Earnings Management

Relationship between competitiveness and operational and financial performance of firms: An exploratory study on the European brewing industry

Financial performance, corporate governance, and financial distress

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