Financial distress of Chinese firms: Microeconomic, macroeconomic and institutional influences

Bhattacharjee, Arnab; Han, Jie

doi:10.1016/j.chieco.2014.07.007

Cited by 65 publications

(55 citation statements)

References 64 publications

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“…It means that the possibility of a company moving towards financial distress is higher. Thus, consistent with Shamser et al (2001), and Bhattacharjee and Han (2014), this regression results support the second hypothesis.…”

Section: Discussionsupporting

confidence: 82%

“…Profitability, liquidity and solvency, as well as the efficiency of management are important in determining corporate financial distresses as well as in the design and implementation of financial policies and investment (Mohammed, 1997). This is also supported by the researchers' view that financial ratios measuring size, liquidity, profitability, and leverage are likely to be important determinants of financial distress besides institutional and corporate governance factors (Bhattacharjee & Han, 2014).…”

Section: Financial Ratios Of Financially Distressed Companiesmentioning

confidence: 62%

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Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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Abstract. This study examines the relationships between financial distress and financial ratio (liquidity, leverage, profitability, firm's performance, and dividend) among public listed companies, using the Altman Z-Score to determine the financial distress levels among public listed companies in Malaysia. Five-year data has been collected (2010 to 2014) from the annual financial statements and from Data Stream of public listed companies in Malaysia. The findings indicate significant relationships between liquidity, leverage, profitability, firm's performance, and dividend with the financial distress levels among the companies in question. This study also examines the interaction effects of financial ratios and the year after implementation of the Malaysian Code on Soheil Kazemian, Noor Shauri, Zuraidah Sanusi, Amrizah Kamaluddin, Shuhaida Shuhdan Monitoring mechanisms and financial distress of public listed companies in Malaysia 93Corporate Governance (MCCG) in 2012 on financial distress levels. The results suggest that only liquidity and firm's performance have stronger effects on financial distress levels in two years after MCCG implementation. This indicates that after the implementation of the Code, liquidity and firms' performance ratios had strong and significant effect on financial distress levels. Overall, this study could help investors, creditors as well as external regulators in monitoring companies from being classified as financially distressed companies.

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Section: Discussionsupporting

confidence: 82%

Section: Financial Ratios Of Financially Distressed Companiesmentioning

confidence: 62%

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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“…Their results indicated the utility of combining accounting, market and macro-economic data in financial distress prediction models for listed companies. In a similar effort, Bhattacharjee and Han (2014) implemented an economic model of financial distress using their own firm-level measure of distress for Chinese listed companies and they found important effects of firm characteristics, macroeconomic instability and institutional factors on the hazard rate of financial distress. Most recently, Alifiah (2014) intended to analyze the financial distress in trading and services sector in Malaysia using financial distress companies as the dependent variable and macroeconomic variables and financial ratios as the independent variables.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Along with other econometric techniques, researchers give growing interest in panel-type econometric models to expose the dynamics of financial and macroeconomic variables and thus to analyze the future macroeconomic activities of these countries (Pradhan et al 2015;Hernandez Tinoco and Wilson 2013;Martinsen et al 2014;Brauning and Koopman 2012). On the other hand, it can be put forward that macroeconomic dynamics can be captured by considering the firm-specific and other financial variables in the prevalent economic, financial integration and development process (Alifiah 2014;Bhattacharjee and Han 2014;Memon et al 2015;Kero 2013;Poghosyan 2013;Claessens et al 2014). In terms of the level of the financial markets, USA is an important case which has developed money and capital markets.…”

Section: Introductionmentioning

confidence: 99%

Revisiting the Interactions Between the Balance Sheet Accounts of Us Telecommunications and Transportation Sectors: Empirical Evidence From Panel-Var Models

Tokmakçıoğlu¹,

Özçelebi²,

Uğurlu³

2015

Pressacademia

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Keywords ABSTRACTIn the wake of the financial liberalization phenomena, the activities of firms can generate signals for financial and macroeconomic situation and the relationship between financial and macroeconomic variables can be captured by firm-based empirical evidence. In this respect, we employ Panel Vector Autoregression (PVAR) modeling to analyze the interactions between the balance sheets accounts of firms in US telecommunications and transportation sectors. Our results expose that investments, gross fixed capital formation and output in US telecommunications and transportation sectors can be highly dependent on the level of money capital and thus it is important for the firms in these sectors to maximize their output under the financing constraint. It is also revealed that increases in total assets and property may lead to a rise in economic value added, the profitability of a firm which in turn lowers the current liabilities. According to our estimations, we suggest that an optimal empirical framework should be derived to capture the microeconomic origins of macroeconomic developments in terms of effects of total productivity shocks in US telecommunications and transportation sectors.

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“…The hazard model, eventually, becomes a bankruptcy prediction model that is often used in various countries such as in USA (Turetsky & McEwen, 2001;LeClere, 2005;Parker, Peters, & Turetsky, 2011), UK (Bhattacharjee et al, 2004), Finland (Laitinen, 2005), Australia (Chancharat, 2008;Gepp & Kumar, 2008), Italy (Donato & Nieddu, 2014), and China (Bhattacharjee & Han, 2014).…”

Section: |mentioning

confidence: 99%

Survival Analysis of Industrial Sectors in Indonesia Companies

Kristanti

Isnuwardhana

2018

Jurnal Keuangan Dan Perbankan

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The objective of this study is to discover evidences whether the variables selected as predictors affect the probability of companies experiencing financial distress. Through a purposive sampling technique, 336 companies listed on the Indonesia Stock Exchange were chosen and then grouped into three sectorals groups of companies. One of evidences resulted from survival analysis using cox hazard model showed that if the control of corruption increases then the probability of companies undergoing financial distress will decrease. During the research, the evidence was consistent across the three sectoral groups of Infrastructure, Mining, Property (IMP); Basic industry and chemical, Consumer goods industry, Miscellaneous (BCM); and Agriculture, Trade, and Investment (AT). Results of the study also showed that the companies, on the average, had implemented good corporate governance. It could be seen from the percentage of the independent commissioner involvement, which exceeded the minimum requirement of 30 percent as stated in its regulation. Among the groups, IMP had the highest average of leverage, operational risk, and size, but contrastively it had the lowest average of profitability. The results of this study can be used by the government to further improve the control of corruption in order to prevent companies from experiencing financial distress. Meanwhile, companies should not also do something encouraging bureaucrats to corrupt. Keywords

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Financial distress of Chinese firms: Microeconomic, macroeconomic and institutional influences

Cited by 65 publications

References 64 publications

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Revisiting the Interactions Between the Balance Sheet Accounts of Us Telecommunications and Transportation Sectors: Empirical Evidence From Panel-Var Models

Survival Analysis of Industrial Sectors in Indonesia Companies

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