Abstract
Japan is a key leading economy in the Asia Pacific region. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in this market (the Tokyo Stock Exchange). A linear regression has been conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a five-year period have also been analysed. The analysis covers the period from 2013 to 2017 (inclusive) and yields a statistically positive correlation between ROE and the Z-Score for the market. Japan registered moderate-to-strong mean and median Z-Scores. These findings further support the strong economic position of this market as an Asian giant.
Highlights
Introducing the Research Topic The Asia Pacific region has experienced dramatic economic growth in recent years (IMF, 2017)
The purpose of this paper is to examine the relationship between corporate financial health, as measured by the Altman Z-Score (Altman, 1968), and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies on the Tokyo Stock Exchange (TSE) which is the largest exchange in Japan
This study extends the work by Meric, Lents, Li and Meric (2014) on the Asia Pacific markets by providing further understanding into the financial health, as measured by the Z-Score, and corporate performance, as measured by ROE
Summary
Introducing the Research Topic The Asia Pacific region has experienced dramatic economic growth in recent years (IMF, 2017). A notable important economy that is riding on these economic growth trends is Japan. This economy is an important business hub in the Asia Pacific economic ecosystem. The purpose of this paper is to examine the relationship between corporate financial health, as measured by the Altman Z-Score (Altman, 1968), and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies on the Tokyo Stock Exchange (TSE) which is the largest exchange in Japan. We seek to determine whether financial health is a determinant of corporate performance in this market
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