The Relevance of Trend Variables for the Prediction of Corporate Crises and Insolvencies

Situm, Mario

doi:10.1515/zireb-2015-0002

Cited by 5 publications

(4 citation statements)

References 111 publications

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“…The result shows that the profitability of the firms in manufacturing industry of Bangladesh is positively influenced by the Liquidity of the firm (See also (Doğan, 2013)). However, unlike Issa (2013) and Situm (2015) this study found that the impact is not statistically significant. Firms with low liquidity may search for ways to collect their receivables shortly and financing the organization in short term with bank and supplier credits.…”

Section: Liquidity As a Profitability Determinantcontrasting

confidence: 90%

“…In another study, Issa (2013) investigated some listed firms in agricultural sector of Nairobi (NSE) and found a statistically significant effect of liquidity that firms had on performance. Situm (2015) in a study, also found that increased liquidity reduces the probability of firm failure. Furthermore, identified that firm's liquidity in short term has significant and positive relationship whit the profitability.…”

Section: Firms Liquiditymentioning

confidence: 88%

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Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

Sahabuddin¹,

Synthia²

2020

The Economics and Finance Letters

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This study aims to investigate the factors which have impact on profitability of the manufacturing firms of Bangladesh. The determinants are divided into three categories i.e. firm-specific, industry-specific and macroeconomic factors and the profitability of the firms is defined with return on assets (ROA). To investigate this relationship, the study has taken into consideration of 508 sample observations from 113 Bangladeshi listed manufacturing firms covering the year from 2014 to 2018. The model this study used, includes the dynamic aspect of profitability and thus a dynamic panel estimator i.e. the General Method of Moments (G.M.M.) was applied. The result of this study shows that firm-specific factors (age, labor cost), industry-specific factor (concentration) and macroeconomic factors (G.D.P. growth rate, inflation) have significant influence on manufacturing firm's profitability. Contribution/Originality:This study examined the Panel data by using General Method of Moments (G.M.M.) to investigate the determinants of profitability which contributes to the existing literature in manufacturing industry of Bangladesh by introducing variables from three different categories; firm-specific, industry-specific and especially macroeconomic factors for the very first time.

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Section: Liquidity As a Profitability Determinantcontrasting

confidence: 90%

Section: Firms Liquiditymentioning

confidence: 88%

Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

Sahabuddin¹,

Synthia²

2020

The Economics and Finance Letters

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“…In addition to measuring short-term risks, liquidity is also related with long-term firm performance and survival. Namely, many firm failure models confirmed that liquidity ratios were useful for failure prediction (Altman, 1968;Pervan, Pervan, & Vukoja, 2011;Situm, 2015). Such studies confirmed that increased liquidity reduces the probability of firm failure.…”

Section: Liquiditymentioning

confidence: 85%

Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis

Pervan

Ćurak

2019

Economic Research-Ekonomska Istraživanja

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Given that the goal of this study was to examine the influence of different factors on a firm's profitability, we designed a model with three categories of profitability determinants: firm-specific, industry-specific and macroeconomic. The analysis was performed on 9359 firms operating in the Croatian manufacturing industry during the 2006-2015 period. Since the designed model was formulated in a way that encompasses the dynamic aspect of profitability, the General Method of Moments (G.M.M.) dynamic panel estimator was applied. Formulation of such a model adds to the existing literature if one takes into account that a dynamic analysis of the drivers of profitability has not been done using data from the Croatian manufacturing sector. The results of the conducted analysis revealed that a firm's age, labour cost and industry concentration, as well as G.D.P. growth and inflation, have significant influence on a firm's profitability. ARTICLE HISTORY

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“…Distress prediction models can be very useful in identifying distress from the early stages. Numerous attempts have been made to explain the phenomenon of financial distress, but no valid theory exists for bankruptcy prediction (Situm Mario, 2015). A theoretically sound, accurate, simple and widely used corporate failure prediction model for stakeholders is yet to be developed (Appiah et al, 2015).…”

mentioning

confidence: 99%

Predictive Modelling for Financial Distress amongst Manufacturing Companies in India

Nair

Sachdeva²

2022

JGE

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This study develops a model predicting financial distress amongst manufacturing companies in India using logistic regression. 18 financial ratios of 574 companies from 34 industries in manufacturing sector were examined for the period 2005 – 2019 to develop and validate the model. The study can be considered as one of the very few which has examined the financial distress indicators of manufacturing sector in India. EBIT margin, Interest coverage, quick ratio, Cash flow from operations to Sales, Debtors Turnover, Working Capital to Total Assets, Fixed Assets to Total Assets are important determinants of financial health of a business. This study provides useful insights to business managers and lenders to review and monitor financial soundness of business. The findings can also help policy makers to design policies and programs to support distressed industries in India. This study also addresses the urgent need for a country specific model for distress prediction. The model developed shows high predictive ability. Key words: Financial distress, Indian manufacturing sector, distress prediction, logistic regression, distress indicators.

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The Relevance of Trend Variables for the Prediction of Corporate Crises and Insolvencies

Cited by 5 publications

References 111 publications

Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis

Predictive Modelling for Financial Distress amongst Manufacturing Companies in India

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