Finding critical financial ratios for Taiwan’s property development firms in recession

Hsieh, Ting-Ya; Wang, Morris H.L.

doi:10.1108/eum0000000006252

Cited by 17 publications

(14 citation statements)

References 6 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…A company’s performance can be determined by comparing the ratios with industry averages (Edum-Fotwe et al , 1996; Langford et al , 1993). A trend can also be observed when comparing the ratios over a few years (Hsieh and Wang, 2001). Typical ranges of financial ratios for US construction companies have been proposed by Peterson (2009).…”

Section: Literature Reviewmentioning

confidence: 79%

Benchmarking contractors’ financial performance: case study of Singapore

Zhang

Koh

Ling

2020

JFMPC

View full text Add to dashboard Cite

Purpose This study aims to develop benchmarks of the financial performance of contractors and a decision support tool for evaluation, selection and appointment of contractors. The financial benchmarks allow contractors to know where they are relative to the best-performing contractors, and they can then take steps to improve their own performance. The decision support tool helps clients to decide which contractor should be awarded the project. Design/methodology/approach Financial data between 2013 and 2015 of 44 Singapore-based contractors were acquired from a Singaporean public agency. Benchmarks for Z-score and financial ratios were developed. A decision tree for evaluating contractors was constructed. Findings This study found that between 57% and 64% of contractors stayed in the financially healthy zone from 2013 to 2015. Ratios related to financial liabilities are relatively bad compared with international standards. Research limitations/implications The limitation is that the data is obtained from a cross-sectional survey of contractors’ financial performance in Singapore over a three-year period. Regarding the finding that ratios relating to financial liabilities are weak, the implication is that contractors need to reduce their financial liabilities to achieve a good solvency profile. Contractors may use the benchmarks to check their financial performances relative to that of their competitors. To reduce financial risks, project clients may use these benchmarks to examine contractors’ financial performance. Originality/value This study provides benchmarks for contractors and clients to examine the financial performance of contractors in Singapore. A decision tree is provided to aid clients in making decisions on which contractors to appoint.

show abstract

Section: Literature Reviewmentioning

confidence: 79%

Benchmarking contractors’ financial performance: case study of Singapore

Zhang

Koh

Ling

2020

JFMPC

View full text Add to dashboard Cite

show abstract

“…Other drawbacks include variation in the valuation used for items in the financial statements as well as operational differences (Wright, 1975). Firms should be aware of the importance of selecting an appropriate ratio to use, as it may undermine the quality FGIC2019 of evaluation (Hsieh & Wang, 2001). Bauman and Shaw (2016) pointed out that certain classification of balance sheet items may reduce investors' ability to accurately forecast stock prices, causing distortion in the result of their ratio analysis.…”

Section: Financial Characteristicmentioning

confidence: 99%

Tax Incentives for Green Industries: Determinants of Performance between Green Building Index (GBI) and Non-Green Building Index Firms in Malaysia

Iliyas

Hamid

Sanusi

2019

KSS

View full text Add to dashboard Cite

Industrialization, urbanization, and economic growth are among the major causes of environmental degradation. These factors are closely related to the construction sector. To curb the issue, the government has initiated tax incentives to encourage developers embracing green technology. Developers who entitled to these tax incentives should enjoy a considerable amount of tax savings, which can be employed for capital reinvestment. Consequently, this study aims to determine whether firms that specifically involve with the construction of green buildings and have received the tax incentives are more likely to achieve relatively better financial performance, as a result of tax benefits gained from the government assistance. For the empirical analyses, secondary data was employed. A total of 138 firm-year observations from 2015 until 2017 used to measure the firm’s characteristic of board size, asset tangibility, deferred tax balances, and leverage against financial performance. The Theory of the Growth of the Firm was used to interpret the relationship between the financial characteristics and firm performance. We obtain evidence that indicates there is no significant difference in the financial performance between the GBI and non-GBI firms. The deferred tax balance, a proxy of the investment tax allowances granted by the Malaysian government to the GBI firms, is shown to be ineffective in improving the financial performances of these firms. The finding of this study suggests that any form of tax assistance from the government for the construction sector has not benefitted its recipients and requires remodeling.

show abstract

“…Access to Taiwanese construction industry data for the empirical study in the investigation is a potential opportunity to apply dynamics to failure prediction. There appears so far to have been relatively little research in this area [41,42]. Thus, the question is one that deserves empirical scrutiny.…”

Section: Information Decomposition Analysis Using Entropy Measures Fomentioning

confidence: 99%

Entropy for Business Failure Prediction: An Improved Prediction Model for the Construction Industry

Bal

Cheung

2013

Advances in Decision Sciences

View full text Add to dashboard Cite

This paper examines empirically the effectiveness of entropy measures derived from information theory combined with discriminant analysis in the prediction of construction business failure. Such failure in modern complex supply chains is an extremely disruptive force, and its likelihood is a key factor in the prequalification appraisal of contractors. The work described, using financial data from the Taiwanese construction industry, extends the classical methods by applying Shannon's information theory to improve their prediction ability and provides an alternative to newer artificial-intelligence-based approaches.

show abstract

Finding critical financial ratios for Taiwan’s property development firms in recession

Cited by 17 publications

References 6 publications

Benchmarking contractors’ financial performance: case study of Singapore

Benchmarking contractors’ financial performance: case study of Singapore

Tax Incentives for Green Industries: Determinants of Performance between Green Building Index (GBI) and Non-Green Building Index Firms in Malaysia

Entropy for Business Failure Prediction: An Improved Prediction Model for the Construction Industry

Contact Info

Product

Resources

About