Prediction of financial failure of Saudi listed companies

Basheikh, Abdullatif Mohamed

doi:10.1504/ijmfa.2012.046426

Cited by 4 publications

(7 citation statements)

References 7 publications

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“…This is true generally as well as, more specifically, in the GCC context. For example, in the GCC context, Hasabo (1987) suggested that total asset to ownership equity, shareholders equity to paid capital and profit from other operations to total profit are important; whereas Basheikh (2012) found return on investment, retained earnings to total assets, fixed assets to ownership equity, asset turnover and ownership equity turnover important.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…Despite these advances, Altman's (1968) model has dominated GCC insolvency research (Aldeehani, 1995, AlShebani, 2006. Some studies have applied Altman's model in its original form (Aldeehani, 1995, AlShebani, 2006; others with minor modifications in terms of predictors (Abudelrahman, 2004, Basheikh, 2012. The exception is Basheikh's (2012) logistic regression application.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…Some studies have applied Altman's model in its original form (Aldeehani, 1995, AlShebani, 2006; others with minor modifications in terms of predictors (Abudelrahman, 2004, Basheikh, 2012. The exception is Basheikh's (2012) logistic regression application. We can argue thus that GCC insolvency research has been dominated by a very limited number of techniques.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

“…With the exception of Basheikh (2012) who applied logistic regression, the few studies that have been conducted have relied on Altman's (1968) Discriminant Analysis (MDA) technique, despite its restrictive assumptions. Second, although GCC studies have used a number of financial ratios to study insolvency (e.g.…”

Section: Introductionmentioning

confidence: 99%

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Analysing corporate insolvency in the Gulf Cooperation Council using logistic regression and multidimensional scaling

Khoja

Chipulu

Jayasekera

2014

Rev Quant Finan Acc

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Design/methodology/approach: Financial ratio data on 56 matched pairs of insolvent and solvent firms are analysed using logistic regression with best-subset selection criteria to identify significant ratios, and prediction accuracy is tested on an ex-ante sample. The main dimensions of ratios, and the weights that firms attach to them, are examined using 3-way Multidimensional Scaling (MDS).Findings: A parsimonious Logit model comprising one profitability, one leverage and two cash flow ratios has accuracy levels of 84.4% overall, 95.6% type I and 73.9% type II. Four financial-ratio dimensions are extracted from the MDS: (i) 'Non-strategic sales activities', (ii) 'Profitability and financial stability balance', (iii) 'Sales activities against capital conversion'; and (iv) 'Market value against cash generation'. Insolvent firms appear very specific and attach most salience to the 'Non-strategic sales activities' dimension; unlike solvent firms which attach more salience to the other three dimensions.Practical Implications: Results indicate profitability ratios should be included in GCC insolvency classification models. It is suggested that firms' managers should focus less on non-strategic sales activities to reduce susceptibility to insolvency. Originality/value:The study provides empirical evidence on insolvency in the GCC and introduces the application of 3-way MDS to insolvency research in the region.

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Section: Literature Review and Research Questionsmentioning

confidence: 99%

Section: Literature Review and Research Questionsmentioning

confidence: 99%

Section: Literature Review and Research Questionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Analysing corporate insolvency in the Gulf Cooperation Council using logistic regression and multidimensional scaling

Khoja

Chipulu

Jayasekera

2014

Rev Quant Finan Acc

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“…ROE is an important indicator to determine the success and failure of the companies [23]. Leedy and Ormrod [24] proposed that quantitative research is based on the existing theories.…”

Section: Methodsmentioning

confidence: 99%

The Relationship between Customer Satisfaction and Return on Equity in Banking Sector

2018

Adv. in Nat. Appl. Sci.

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Discriminating factors in financial risk tolerance: investors' economic perspective

Chhatoi

Mohanty²

2023

JEAS

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PurposeThis paper aims to identify the variables responsible for classifying the investors into risk takers (RT) and risk avoiders (RA) across their economic perspectives.Design/methodology/approachThe research offers a novel and unobtrusive measure of classifying investors into RT and RA based on a set of financial risk tolerance (FRT) questions. The authors have investigated the causes of discrimination across economic perspectives over a sample of 552 investors exposed to market risk.FindingsThe authors identify that out of the total of 11 risk assessment variables, only three are responsible for classifying investors into RA and RT. The variables are risk return trade-off, comfort level dealing with risk, and understanding short-term volatility. Financial literacy is considered as an emerging cause of discrimination. Further, the authors highlight the most striking finding to be the discriminating factors across wealth and source of income of the investors.Originality/valueExisting research on FRT can be loosely segregated into three groups: the relationship between an individual's financial and non-FRT, estimation of FRT score (FRTS), and perceived self-assessed FRTS. The current research roughly falls into the third category of study where the authors have not only studied the self-assessed risk tolerance but also evaluated the predictors. Most of the studies have focussed on estimating self-assessed FRT with the help of one direct question to the respondent. However, the uniqueness of this study is that the researchers have used an instrument comprising a series of direct and indirect questions that can easily estimate the self-assessed risk perception and also discriminate the role of the economic factors that have any impact on self-assessed FRTS.

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Prediction of financial failure of Saudi listed companies

Cited by 4 publications

References 7 publications

Analysing corporate insolvency in the Gulf Cooperation Council using logistic regression and multidimensional scaling

Analysing corporate insolvency in the Gulf Cooperation Council using logistic regression and multidimensional scaling

The Relationship between Customer Satisfaction and Return on Equity in Banking Sector

Discriminating factors in financial risk tolerance: investors' economic perspective

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