Download or read book Empirical Study on Financial Distress Early Warning for the Listed Companies of Manufacturing Industry in China written by Huan Chen and published by . This book was released on 2010 with total page 236 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Predicting Early Warning Signals of Financial Distress written by Jan Klobucnik and published by . This book was released on 2017 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study proposes a simple theoretical framework that allows for assessing financial distress up to five years in advance. We jointly model financial distress by using two of its key driving factors: declining cash-generating ability and insufficient liquidity reserves. The model is based on stochastic processes and incorporates firm-level and industry-sector developments. A large-scale empirical implementation for US-listed firms over the period of 1980-2010 shows important improvements in the discriminatory accuracy and demonstrates incremental information content beyond state-of-the-art accounting and market-based prediction models. Consequently, this study might provide important ex ante warning signals for investors, regulators and practitioners.

Download or read book Assessing China s Corporate Sector Vulnerabilities written by MissMali Chivakul and published by International Monetary Fund. This book was released on 2015-03-30 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper documents and assesses the risk stemming from rising corporate indebtedness in China using a firm-level dataset of listed firms. It finds that while leverage on average is not high, there is a fat tail of highly leveraged firms accounting for a significant share of total corporate debt, mainly concentrated in the real estate and construction sector and state-owned enterprises in general. The real estate and construction firms tend to face lower borrowing costs and could withstand a modest increase of interest rate shocks despite their high leverage. The corporate sector is however vulnerable to a significant slowdown in the real estate and construction sector. Our sensitivity analysis suggests that the share of debt that would be in financial distress would rise to about a quarter of total listed firm debt in the event of a 20 percent decline in real estate and construction profits.

Download or read book Financial Distress Resolution in China Two Case Studies written by Amy Kam and published by . This book was released on 2008 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines two financially distressed companies and their restructuring strategies. The existing distress literature focuses on developed economies such as U.S. and U.K. This paper is a pioneering work in an emerging market context. The main purpose of the case studies is to provide rich in-depth evidence on complex events which large-scale empirical studies of necessity ignore. To achieve this, the paper first analyses the firms' accounting-based performance, both pre- and post-distress, to understand the nature of the firms' difficulties. It then examines the series of complex restructuring procedures each firm initiated and uses an event study approach to evaluate the stock market's reaction to these strategies. We provide an in-depth understanding of the special features of the Chinese situation, such as the role of government and other more commercially driven shareholders; the subsequent importance of social policy issues; the protracted and complex nature of the restructurings; and the frequent use of mergers, share transfers, asset swaps and asset sales. The analysis provides new hypotheses for further empirical study on a large-scale basis.

Download or read book The efficiency of early warning indicators for financial crises written by Jens Michael Rabe and published by diplom.de. This book was released on 2000-03-30 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inhaltsangabe:Abstract: The banking and currency crises of the last two decades inflicted substantial financial, economic, and social damage on the countries in which they originated. In this work, the efficiency of early warning indicators for these disastrous economic events is evaluated. An analysis of the traditional and recent literature on currency crises is performed in order to extract potential early warning indicators that are suggested by theory. Alongside others, these candidate indicators are tested in alternative empirical studies that are reviewed in this work. The results are mixed, but somewhat encouraging for further research in this field. Furthermore, the analysis is extended to a critique of systems of early warning indicators currently used by international institutions. Inhaltsverzeichnis:Table of Contents: 1.Introduction1 2.The Currency Crisis Literature as a Reference Point for the Identification of Early Warning Indicators4 2.1The Traditional Theory5 2.2Second Generation Models11 2.3A Cross-generation Framework Proposition19 2.4Early Warning Indicators as Suggested by Theory22 3.The Empirical Assessment of Early Warning Indicators24 3.1Univariate Indicators for Financial Crises24 3.1.1Cross-Country Regressions26 3.1.2Multivariate Probit Models35 3.1.3The Signals Approach40 3.2Composite Leading Indicators for Financial Crises48 4.A Critique of Early Warning Indicators Used in Practice53 5.Conclusion64 Appendix68 Bibliography69

Download or read book Determinants of Financial Distress of ST and PT Companies written by Dairui Li and published by . This book was released on 2009 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many prior studies have been devoted to financial distress of Chinese listed companies over the last two decades. However, these distressed companies are still failed to find out the exact determinants of financial distress. Therefore, the purposes of this paper are to provide an investigation of financial distressed companies trading on Chinese Stock Exchanges, and to elaborate the determinants of falling into financial distress by using a panel data set containing information on the stock market under Binary Logit Model during the period 1998-2005. The empirical findings present the relationship between 13 independent variables and the probability of financial distress, and particularly analyze the impact of corporate governance on Chinese financial distressed companies. Of these corporate governance variables, agency costs and ownership structure appear to be important factors to affect the probability of financial distress.

Download or read book Quantitative Methods for Economics and Finance written by J.E. Trinidad-Segovia and published by MDPI. This book was released on 2021-02-12 with total page 418 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a collection of papers for the Special Issue “Quantitative Methods for Economics and Finance” of the journal Mathematics. This Special Issue reflects on the latest developments in different fields of economics and finance where mathematics plays a significant role. The book gathers 19 papers on topics such as volatility clusters and volatility dynamic, forecasting, stocks, indexes, cryptocurrencies and commodities, trade agreements, the relationship between volume and price, trading strategies, efficiency, regression, utility models, fraud prediction, or intertemporal choice.

Download or read book A Study of Financial Distress and R D in Chinese Enterprises written by Jie Han and published by . This book was released on 2012 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past 30 years, the Chinese economy has been going through complex transformation from a centrally planned towards a market economy. The reform of the enterprises has played an important part in this transformation. This is in addition to macro economy reforms, as well as changes in the institutional framework. The thesis examines the implications of macroeconomic, ownership structure, well as comprehensive institutional framework changes for Chinese enterprises' survival and R&D activities. I study the impact of both microeconomic factors and the macro economy on the financial distress of Chinese listed companies over a period of massive economic transition, 1995 to 2006. Using hazard regression analysis, I find substantial effect of firm level covariates (age, size, cash flow and gearing) on financial distress, but also significant roles for macroeconomic stability and institution effect. Business exits in my data on Chinese quoted firms are vanishingly rare, arguably because of active state protection for the failing firms. I investigate the firms' innovation activity and efficiency of different ownership sectors. Ownership influence on R&D investment and efficiency is estimated, using productivity frontier function, for a sample of large and medium size Chinese industrial enterprises from 2000-2007. I found that the presence of state ownership is positively related to R&D investment, but negatively related to R&D performance. Foreign firms are technical leader in Chinese industries and have advantage in R&D efficiency. My results also show significant cross industries differences in R&D effort and technical level. These point out that firms possessing more innovation resources and government support are not the ones performing better technically. I extend my study into a more general mixed duopoly model in which a wel- fare maximizing public firm competes with profit maximizing private firm in R&D. I assume that different operation strategy influence firms' tolerance of R&D spillover which plays a key role in their R&D investment mount and technology efficiency. I prove that public firm is more likely to share its R&D fruit and its higher R&D invest- ment is companied by lower efficiency. Overall, macroeconomy on firm survival and ownership structure on firm inno- vation activities are channels to understand Chinese economy reform. Because condi- tions in China were similar in many ways to other transition economies, these results provide important information about the process of economic transformation more generally.

Download or read book Assessing China s Corporate Sector Vulnerabilities written by Mali Chivakul and published by . This book was released on 2015 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper documents and assesses the risk stemming from rising corporate indebtedness in China using a firm-level dataset of listed firms. It finds that while leverage on average is not high, there is a fat tail of highly leveraged firms accounting for a significant share of total corporate debt, mainly concentrated in the real estate and construction sector and state-owned enterprises in general. The real estate and construction firms tend to face lower borrowing costs and could withstand a modest increase of interest rate shocks despite their high leverage. The corporate sector is however vulnerable to a significant slowdown in the real estate and construction sector. Our sensitivity analysis suggests that the share of debt that would be in financial distress would rise to about a quarter of total listed firm debt in the event of a 20 percent decline in real estate and construction profits.--Abstract.

Download or read book An Analysis of Short term Corporate Financial Distress Early warning Models written by Xinmiao Yu (M.Fin.) and published by . This book was released on 2013 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Characteristics of Corporate Distress in an Emerging Market written by Amy Kam and published by . This book was released on 2005 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper is one of the first studies to empirically examine the nature and cause of financial distress in an emerging market context. This is important given the impact of the recent global privatization phenomenon. These privatized firms have since been subject to a new competitive environment, redefined objectives and management incentives. In this context, we investigate the characteristics of a sample of 100 distressed firms in China between 1999 and 2003. Existing bankruptcy and distress literature cites two main causes of financial distress: debt overhang and economic distress. By comparing the distressed firms' financial and operating performance with that of their respective industries, we conclude that corporate distress in China is caused predominantly by firm level poor operating performance, not by leverage. Our evidence indirectly speaks to the debate that financial renegotiations between distressed firms and their creditors are inefficient. In addition, our sample provides a unique opportunity to study how (partial) government ownership affects firm performance and efficiency in the context of financial distress and soft budget constraints.

Download or read book A Financial Distress Pre warning Study by Fuzzy Regression Model of Tse listed Companies written by Ying Cheng Wen and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Ratios Discriminant Analysis and the Prediction of Corporate Failure written by Yue'e Xu and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Cutting Edge Research Topics on Multiple Criteria Decision Making written by Yong Shi and published by Springer Science & Business Media. This book was released on 2009-07-09 with total page 871 pages. Available in PDF, EPUB and Kindle. Book excerpt: MCDM 2009, the 20th International Conference on Multiple-Criteria Decision M- ing, emerged as a global forum dedicated to the sharing of original research results and practical development experiences among researchers and application developers from different multiple-criteria decision making-related areas such as multiple-criteria decision aiding, multiple criteria classification, ranking, and sorting, multiple obj- tive continuous and combinatorial optimization, multiple objective metaheuristics, multiple-criteria decision making and preference modeling, and fuzzy multiple-criteria decision making. The theme for MCDM 2009 was “New State of MCDM in the 21st Century.” The conference seeks solutions to challenging problems facing the development of multiple-criteria decision making, and shapes future directions of research by prom- ing high-quality, novel and daring research findings. With the MCDM conference, these new challenges and tools can easily be shared with the multiple-criteria decision making community. The workshop program included nine workshops which focused on different topics in new research challenges and initiatives of MCDM. We received more than 350 submissions for all the workshops, out of which 121 were accepted. This includes 72 regular papers and 49 short papers. We would like to thank all workshop organizers and the Program Committee for the excellent work in maintaining the conference’s standing for high-quality papers.

Download or read book A Three tier Approach to Determine Financial Distress of Companies Listed on the Johannesburg Stock Exchange written by Sibusiso Wellington Sabela and published by . This book was released on 2016 with total page 205 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study presents a three-tiered approach to determine financial distress in companies listed on the Johannesburg Stock Exchange. The objective of this unique approach is to contribute to the existing knowledge base in the study of financial distress prediction. The three-tiered approach sees the development of a: (i) basic model, (ii) Merton model, and (iii) hybrid model. The basic model is further split in three phases. In the first phase the model is based on fundamental data; the second phase adds market variables; and the third phase adds macroeconomic indicators. The first phase points to various company specific ratios, the second phase points to various market based ratios and the third phase points to external economic indicators. Pioneered by Merton (1974:449), the Merton model is a structural model with its framework adopted from the Black-Scholes option pricing methodology. Therefore, the hybrid model is a combination of the basic and Merton models. This study explores the effectiveness of a hybrid model, in which both the fundamental and market data are used as input variables. This combination is intended to enhance the predictive power of a company's default event, given that both variables convey company-specific credit risk information that is not considered by the other. In developing the basic model, this study focuses on exploring a multinomial approach where companies are categorised in three groups: distressed, depressed and healthy. This is in line with the thinking that failure does not affect companies immediately, but is rather a process. Healthy companies go through a depression phase before they actually fail. The statistical technique of choice for the basic and hybrid models is the multinomial logistic regression. This technique is chosen on its strength over alternatives like multi-discriminant analysis, with the nature of data being the driving force. Certain statistical tests were performed on the data, like the Kolmogorov-Smirnov and Shapiro-Wilk statistical tests of data normality. The sample of companies used in the present study is categorised as follows; 8% distressed, 14% depressed, and 78% healthy. Given that the percentage number of companies in each category is not equal, the statistical integrity of multi-discriminant analysis would be grossly compromised. The Merton model is based on the formula as derived by its pioneer. This mathematical formula uses five estimated variables: asset value, asset volatility, debt level, risk-free rate, and time. The fundamental assumption of structural models is that there is a cause-effect, economically motivated reason why firms default. Default is highly likely to occur when the market value of a firm's assets is insufficient to cover its liabilities in the future. This balance sheet approach to measuring risk means that the market-based models share common ground with fundamental models in credit analysis. However, a major advantage of market-based models over the fundamental approach is that they provide both timely warning of changes in credit risk and an up-to-date view of a firm's value. This view is given on the basis that market prices are indicative of future cash flows of the business. The most important motivation to study both these models and further develop a hybrid model within the South African market is the lack of such academic research in the local academic domain. Therefore, this uniquely positions the study where the distress probability is studied by applying both fundamental and market data. This study also aims to investigate which of the two models is better at differentiating defaulting and non-defaulting firms. In this way, the study assesses the extent to which different failure prediction models may yield significantly different rankings for the same firm. Furthermore, the study explores the extent of gains (if any) that can be realised by combining the two models' predictions. The present study is based on information sourced from the Johannesburg Stock Exchange, INET BFA, South African Reserve Bank and other relevant academic material. To be included in the sample, firms are required to have a minimum listing period of at least 24 months to ensure that the firm's market price reflects the market's collective opinion of the prospect of its business. For purposes of the fundamental data, companies are required to have existed for at least five years to be included in sample. The economic period under review in this study is 2005-2014. The 2014 cut-off is set to ensure the availability of financial statements. The study has a sample size of 100 companies, consisting of eight distressed, 14 classified as depressed, and 78 healthy.

Download or read book A Study of Financial Distress Prediction of Chinese Growth Enterprises written by Hui Hu and published by . This book was released on 2011 with total page 310 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: "Because of high financial risk and imperfections in the financial constitution of growth enterprises, the investors are cautious about investing in Growth Enterprise Market (GEM) in Hong Kong and in the newly established GEM in mainland China (Chen, Sun and Zhang, 2005). Therefore, it has become very important to develop a reliable financial distress prediction model which covers appropriate predictors to predic the financial distress of growth enterprises on the GEM. The present study, using the data of growth enterprises on Hong Kong GEM, made the first attempt to construct a financial distress prediction model for Chinese growth enterprises. The methods including Mann-Whitney-Wilcoxon (MWW), factor analysis and logistic regression, were then applied to analyse the data. One financial distress model which included financial factors and another financial distress model which included non-financial and macroeconomic factors were constructed in the method section. Based on these two models, the present study developed a financial distress prediction model, which used not only financial factors but also non-financial and macroeconomic factors."

Download or read book Company Financial Failure and Distress written by Francois Van der Colff and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study had a two-fold purpose. Firstly, to establish whether a model utilising a number of non-financial variables in conjunction with a model based on financial variables is able to provide a more accurate company financial distress model than a model based on financial variables only. Secondly, to reinforce the theoretical foundation of company financial distress and failure through an examination of existing studies in order to enhance insight into the financial distress and failure phenomenon. A phased approach was applied to identify a sample of 95 companies listed on the JSE. A questionnaire comprising 14 questions, divided into five broad categories based on the strategic capability of a subject company was employed. The published Director's Report was used to evaluate the questions on a zero to five-point scale over a 10-year observation period. The relationship between the questionnaire test results and the De la Rey K-Score for the subject companies was tested utilising the Cramer's V statistical test. The Cramer's V test is a chi-square based measure of nominal association yielding a value between zero and one. A movement towards one indicates a strengthening relationship, in this instance, between the non-financial test result and the De la Rey K-Score. A movement towards zero is an indication of a weakening relationship. A limited test result in favour of a strengthening relationship was insufficient to prove that the primary objective of this study has been achieved. The secondary objective was achieved in view that this was an exploratory study. It is, against this background, that empirical research is recommended in order to prove that a model combining financial variables with true non-financial variables should provide a more accurate company distress prediction model.