Financial distress costs in Latin America: A case study

Sanz, Luis J.; Ayca, Julio

doi:10.1016/j.jbusres.2005.09.014

Cited by 11 publications

(4 citation statements)

References 1 publication

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“…Specifically, following Wruck (1990), Asquith et al (1994), Andrade andKaplan (1998), Whitaker (1999) and, more recently, San and Ayca (2006), the present study adopts a definition of financial distress that evaluates the company's capacity to satisfy its financial obligations. This permits the prediction of financial distress situations other than bankruptcy similar to those of Grice and Dugan (2001) and Grice and Ingram (2001).…”

Section: A Finance-based Definition Of Financial Distressmentioning

confidence: 99%

Estimating financial distress likelihood

Pindado

Rodrigues

Torre

2008

Journal of Business Research

190

167

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Section: A Finance-based Definition Of Financial Distressmentioning

confidence: 99%

Estimating financial distress likelihood

Pindado

Rodrigues

Torre

2008

Journal of Business Research

190

167

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“…This financial condition was not intended to predict the firm's bankruptcy. Instead, this research focused on a firm's financial distress due to its possibly failing to meet its financial obligations (Pindado et al, 2008;Sanz and Ayca, 2006). First, this study modified Altman's Z-score calculation by considering the firm's debt level in Eq.…”

Section: Methodsmentioning

confidence: 99%

Earnings management and financial distress or soundness determining CEOs’ future over- and under-investment decisions

Sumiyana

Na’im

Kurniawan

et al. 2023

Humanit Soc Sci Commun

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This study investigates the association between CEOs’ over-confidence in experiencing financial distress or soundness, future earnings management, and over and under-investment decisions. Specifically, it makes deeper the association between financial distress (soundness), requiring to increase (decrease) earnings management and over (under)-investment decisions. Methodologically, the authors demonstrate the CEOs’ aggressive behaviour in managing their firms’ earnings in developing countries. In other words, it shows a literature gap in some extant research that most CEOs in developing countries would intentionally manage future earnings for constructing future investment decisions. Then, it highlights that CEOs in developing countries tend to be over-confident because of cognitive distortion, assembling the earnings management to improve future performance. Finally, this study presents a newness with three critical reasoning arguments. First, this study uses the prospect theory, framing, conservatism and psychological projection to explain the CEOs’ future investment decisions due to past earnings information, which causes their behaviour to be more optimistic. Second, this research considers that financial distress or soundness influences the association between earnings management and future over(under) investment decisions. Third, this study investigates CEOs’ over-confidence using an international setting due to characteristic differentiation between advanced and developing countries, influencing this association.

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“…The variable of interest represents a label according to Pindado, Rodrigues & De La Torre (2008), which measures the company's ability to manage its debt. Thus, this study uses a financial criterion to determine this variable, considering a definition of financial distress (FD) based on the company's failure to meet its obligations is consistent with an ex-ante approach (Sanz & Ayca, 2006).…”

Section: The Databasementioning

confidence: 99%

Anticipating corporate’s distresses

Barboza

Duarte

Cunha

2022

Exacta

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Master's degree in Business Administration from the Faculty of Business Graduated in Business Administration and Accounting from the University Center of Patos de Minas (UNIPAM), with a specialization in Business Strategy Management and an MBA in People Management. He is currently a Master's student in Administration at the Faculty of Management and Business (FAGEN) of the Federal University of Uberlândia (UFU). Acts as a substitute professor at the Faculty of Management and Business at the Federal University of Uberlândia, teaching classes at the Undergraduate level. His research interests involve: Third Sector, Organizational Behavior, Consumer Behavior, Business Consulting and Risk Management.

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Financial distress costs in Latin America: A case study

Cited by 11 publications

References 1 publication

Estimating financial distress likelihood

Estimating financial distress likelihood

Earnings management and financial distress or soundness determining CEOs’ future over- and under-investment decisions

Anticipating corporate’s distresses

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