Debt Default Research Articles

Assessing the impact of the Covid-19 pandemic on the financial and economic structure performance of Turkish sea freight transport sector

The impact of Covid-19 on the global economy’s functioning and the long-term growth of supply chains was first reported in Türkiye in March 2020. The purpose of this study is to determine whether the Covid-19 pandemic has had an impact on the financial and economic structure performance of Turkish sea freight transport sector, as well as how the sector has adapted to the new reality brought on by Covid-19. In this regard, the consolidated financial statements of 997 companies for the year 2020 were studied using ratio analysis, and the results were compared to the financial outputs of the 2008 global financial crisis and the European sovereign dept crisis. As a result of the study, it was determined that the sector’s response to crises in different time periods varied. In order to avoid debt default during the pandemic, the capital structure restricted short-term resources while increasing long-term resources. Despite the pandemic conditions, it has been noticed that there are no barriers to accessing money market instruments in the sector, that the working capital structure has been enhanced, and that a balanced financing plan has been established to ensure the continuity of cash flows. This is the first study that analyses the sector as a whole, reveals the financial and economic repercussions of the pandemic on the sector, and compares these effects to those of recent financial crises. In addition, authorities of the maritime transport industry in other countries will find this helpful research for conducting comparative analyses, and the findings can be generalised.

Study of the Global Economic Recession

Since 2020, the global economy and financial system have suffered the biggest demand and supply shock since the financial crisis in 2008 as the new pneumonia epidemic spread to almost all countries. Panic in international financial markets has been rising, and asset prices of stocks, bonds, currencies, commodities and other assets have fallen rapidly. This paper analyzes the impact of the epidemic on the global economic and financial system from different perspectives, including the supply chain, the Russia-Ukraine war, and the US interest rate hike. In this paper, we argue that since 2020, the "pandemic" of Newcastle pneumonia has caused a comprehensive impact on the manufacturing industry, service industry, public confidence, and social governance, and a liquidity crisis in the international financial markets. Whether the epidemic will evolve into a financial and economic crisis depends on the development of the epidemic and the effectiveness of preventive and control measures, on whether the epidemic will trigger corporate debt defaults and sovereign debt crises in some countries, and on whether a fall in oil prices or geopolitical conflicts will trigger financial and capital flow crises in emerging markets. Given the inevitable impact of the epidemic on the economic growth situation in various regions, the global economy is expected to fall into recession in the future.

PENGARUH FINANCIAL DISTRESS, DEBT DEFAULT DAN UKURAN PERUSAHAAN TERHADAP OPINI AUDIT GOING CONCERN

This research aims to prove empirically the effect of financial distress, debt default, and firm size on going concern audit opinion. This research was conducted in various manufacturing companies in the textile and garment sub-sector. The research method used is quantitative associative. The type of data used is secondary data in the form of annual financial reports published on the Indonesia Stock Exchange (IDX) for 2016–2020. Samples were collected using purposive sampling method. The number of companies that were used as research samples were 14 companies with a research period of 5 (five) years, so that 70 observation data were obtained. The results of the F statistical test of financial distress, debt default, and company size simultaneously affect the going concern audit opinion. The results of the t-statistical test of the financial distress variable partially negatively affect the going concern audit opinion, while debt default partially has a positive effect on the going concern audit opinion, but the company size partially does not affect the going concern audit opinion.

External Debt Default and Foreign Direct Investments

Abstract We analyze the effect of a country’s defaults and restructuring its’ official and private external debt on its ability to attract foreign direct investment. We use different types of foreign direct investments: FDI Flows, Horizontal FDI, vertical FDI, cross-border mergers & acquisitions, and greenfield FDI. Using the Poisson-Pseudo Maximum Likelihood (PPML) estimation method, which has never been used in the literature to do a similar analysis, we find that external debt default decreases all types of FDIs. Furthermore, we also conduct a more granular sensitivity analysis by analyzing the effect of political risk ratings, effect on non-advanced economies, and effect on highly indebted poor countries (HIPC). We find that cross-border mergers and acquisitions (M&A) decrease as corruption risk decreases and increases as law and order improve. For HIPC countries, official external debt restructuring increases greenfield FDI. JEL classification number: C1, C33, D72, F21, H63, O57. Keywords: Debt Default, Restructuring, Foreign Direct Investment (FDI), External Debt, ICRG, Poisson-Pseudo Maximum Likelihood (PPML), Political Risk.

Research on PPP Enterprise Credit Dynamic Prediction Model

The debt default risk of local government financing vehicles (LGFVs) has become a potential trigger for systemic financial risks. How to effectively prevent hidden debt risk has always been a hot issue in public-private partnership (PPP) financing management research. In recent years, machine learning has become more and more popular in the study of enterprise credit evaluation. However, most scholars only focus on the output of the model, and do not explain in detail the extent to which variables affect the model and the decision-making process of the model. In this paper, we aim to apply a better credit rating method to the key factors and analysis of LGFV’s default risk, and analyze the decision-making process of the model in a visual form. Firstly, this paper analyzes the financial data of LGFVs. Secondly, the XGBoost-logistic combination algorithm is introduced to integrate the typical characteristics of PPP projects and construct the credit evaluation model of LGFVs. Finally, we verify the feasibility of the model by K-fold cross validation and performance evaluation. The results show that: (1) net worth, total assets, operating income, and return on equity are the most critical factors affecting the credit risk of LGFVs, asset-liability ratio and tax revenue are also potentially important factors; (2) the XGBoost-logistic model can identify the key factors affecting the credit risk of LGFVs, and has better classification performance and predictive ability. (3) The influence of each characteristic variable on model decision can be quantified by the SHAP value, and the classification decision visualization of the model improves the interpretability of the model.

What is the Optimal Financial Structure Applicable to All Companies

To maximize value, companies must adopt the optimal financial structure. However, identifying this structure is not easy. Literature does not give satisfactory results. To remedy this difficulty, we have sought the optimal financial structure applicable to all companies. Thus, in a new approach by the cost of capital, using modelling, we identify an optimal financial structure model that can neutralize the risk of default of debt: D/K with t ? i but t > i.

The Influences of Company�s Growth, Cash Flow, and Debt Default on the Acceptance of Going Concern Audit Opinions

A going concern audit opinion is a modified assumption given by the auditor for a company that represents material doubts or uncertainties about its ability to continue operations. This study intends to provide empirical evidence regarding the simultaneous and partial effects of company growth, cash flow, and debt default on acceptance of going concern audit opinions in coal subsector companies listed on the Indonesia Stock Exchange in 2016-2020. Sampling was selected using a purposive sampling technique, obtained 18 companies from 90 data that met the criteria. Hypothesis testing was carried out using descriptive analysis and logistic regression. The results showed that company growth, cash flow, and debt default simultaneously affected the acceptance of going-concern audit opinions. Partially, the company's growth does not affect the acceptance of going-concern audit opinions. Conversely, cash flow has a negative effect on receiving going-concern audit opinions, and debt default positively affects receiving going-concern audit opinions. This research is expected to provide further information regarding the factors influencing the receipt of a going concern audit opinion. These factors can be used by company management as evaluation material to avoid receiving a going concern audit opinion by paying more attention to the company's financial performance and soundness, especially cash flow and debt defaults. For investors, the research results can be used as a wiser consideration when investing in companies with poor cash flow and default status.

The Systemic Impact of Debt Default in a Multilayered Global Network Model

The Systemic Impact of Debt Default in a Multilayered Global Network Model

PENGARUH FINANCIAL DISTRESS, DEBT DEFAULT DAN OPINI AUDIT TAHUN SEBELUMNYA TERHADAP OPINI AUDIT GOING CONCERN

The pandemic event has made the company experience liquidity pressure due to the impact of credit restructuring that some companies are worried about. This causes the current economic conditions to have an uncertain nature in the future, thus causing doubts in the company's business situation. The purpose of this study is to determine and test whether there is an effect of financial distress, debt default, and the previous year's audit opinion on the receipt of audit going concern. This research is a type of quantitative research using quantitative descriptive methods. The sample of this study was obtained using the purposive sampling method where the sample was determined based on certain criteria by the researcher. The object of this study is real estate and property companies listed on the Indonesia Stock Exchange during 2016-2020. Based on the results of the analysis of the f test results, it shows that financial distress, debt default, and audit opinions for the previous year have a significant effect on the audit opinion going concern. the results of the t-test of each variable, namely financial distress, have a significant positive effect on the audit opinion going concern. debt defaults have no significant effect on audit opinion going concern. the previous year's audit opinion had a significant effect on the audit opinion going concern

Peran Audit Delay, Debt Default, Dan Pertumbuhan Perusahaan Terhadap Opini Audit Going Concern : Reputasi Auditor Sebagai Variabel Moderasi

This study aimed to analyze the effect of audit delay, debt default and company growth on going concern audit opinion with auditor reputation as a moderating variable. This research is a quantitative study using logistic regression with the SPSS 26 analysis tool. The sample of this research is the mining sub-sector companies listed on the Indonesia Stock Exchange in 2018-2020. The research sample was taken using purposive sampling method which resulted in 96 samples. Based on the hypothesis test, this research reveals that mining sub-sector companies listed on the Indonesia Stock Exchange during 2018-2020 will receive a going concern audit opinion if the company fails to pay its debts. On the other side, audit delay and company growth do not cause the company to accept a going concern audit opinion. The reputation of the auditor has not been able to encourage the acceptance of a going concern audit opinion.
 Keywords : audit delay, debt default, compony growth, reputasi auditor, going concern audit opinion

Prediction of debt crisis in Southern African Development Community (SADC)

Debt levels in the Southern African Development Community (SADC) have been rising over the years as countries undertake infrastructure projects and the increased use of bilateral and private credit. Although on aggregate the debt levels are within SADC recommendations on macroeconomic convergence, there are growing fears that a number of countries in the region might default and indeed some are already in default. The frequent occurrence of debt crisis is a cause for concern. This research is an attempt to determine the significant predictors from a small set of variables commonly touted as important in debt crisis prediction. The research considered the output gap, real exchange rate, external debt ratios, commodity shocks and quality of governance as potential predictors. The factor variables being of particular interest Empirical findings on these potential predictors is somehow mixed, which partly is accounted for by the differences in model specifications from author to author. The research employed the event study and fixed effects logistic regression for modelling the probability of default of public debt. Results of the model illustrate that governance indicators and commodity price shocks (global level) were not statistically significant predictors of debt crisis as commonly suggested by theory. However the external debt, output and the real foreign exchange rate were all significant. Real output was shown to be one of the most important predictors of debt crisis. The estimated probability model fared relatively better than a random model.

OPINI AUDIT GOING CONCERN DAN FAKTOR YANG MEMPENGARUHINYA

Obtaining empirical evidence of how the effect debt default,finacial distress , Audit Opinion Preceding Years is the goal of this study This study focused on manufacturing companies listed in Indonesia Stock Exchange (BEI) in the period 2019-2021. 317 number of observations sample obtained by the method nonprobability sampling purposive sampling technique. The analysis technique used in this research is logistic regression analysis. The analysis showed that the profitability, and leverage has no effect on tax avoidance. Sales growth has negative effect on tax avoidance

Dynamics of the public-debt-to-gdp ratio: can it explain the risk premium of treasury bonds?

We examine the relationship between the risk premium markets demand to hold the Treasury Bonds of a given country and the sustainability of the public finances of the country. We inquire to what extent do markets use the dynamic evolution of the public-debt-to-gdp ratio as an indication of the likelihood of a public debt default. Specifically, our empirical research design involves the following steps: (i) we use the dynamic equation of the public-debt-to-gdp ratio to build forecasts of future values of this ratio in the eurozone countries; (ii) we then use these forecasts in a regression to see how important they are to explain the risk premium implicit in the treasury bond yields. We find that projections of future values of the public-debt-to-gdp ratio do impact current 10 year bond spreads. According to our regressions, markets seem to give more weight to forecasts with a horizon smaller than 10 years. Our results suggest that agents use a relatively simple mechanism to forecast the public debt-to-gdp ratio, a mechanism which can be used while updated forecasts from international organizations are not yet available. On the other hand, according to our estimations, euro area sovereign debt markets ceased to significantly discriminate countries based on their public debt prospects after the 2012 ‘Whatever It Takes” speech and the announcement of the Outright Monetary Transactions (OMT) program—suggesting that these events had a significant calming effect on the markets.Supplementary InformationThe online version contains supplementary material available at 10.1007/s10663-022-09547-8.

Pension Portfolio Optimization and Impact of Debt Defaults

Usually, the government offers two pension methods, a lumpsum buyout or an annual pension. In this paper, we provide an effective method to evaluate these two government pension methods. Initially, we constructed a pension portfolio consisting of five popular assets, such as the tech giants and popular ETFs. Then we use the Fama-French 3-factor model to calculate the expected returns of every asset. The Sharpe Ratio is the standard to make a choice that accepts the portfolio with a pension or the portfolio without a pension. Except for the Sharpe Ratios, we also took the government debt default and retirement ages into consideration. Government debt defaults contain two types, partial defaults, and full defaults. These two different kinds of defaults can have a significant impact on pension choice. With this method, we could obtain the decision boundary of the pension choice. Investors could utilize this boundary to decide whether to accept a pension or a lumpsum buyout by themselves.

Pengaruh Ukuran Perusahaan, Opini Audit Tahun Sebelumnya, Debt Default dan Opinion Shopping Terhadap Opini Audit Going Concern

The purpose of this research is to see how company size, previous audit opinion, debt default, and opinion shopping affect going concern audit opinion. This study uses a sample of manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2015-2019. This is quantitative research. Secondary data in the form of financial reports obtained from the IDX website is used in this study. Logistic regression analysis method was used in this study with the help of SPSS Ver.26.0. The number of service companies in manufacturing companies studied in this study were 27, with an observation period of 5 years. The number of random samples for investigation was 135 annual financial statements, as determined by a special random sampling procedure.

Analisis Faktor-Faktor Yang Mempengaruhi Opini Auditgoing Concern Pada Perusahaan

This study aims to analyze the effect of debt default, opinion shopping, previous year's audit opinion, and disclosure on going concern audit opinion taken by the auditor. The population in this study were banking companies listed on the Indonesia Stock Exchange in 2013-2016. The research sample was taken using purposive sampling as many as 124 banking companies. This study uses logistic regression analysis. The results of this study can be concluded that debt default has a positive and significant effect on the acceptance of going-concern audit opinion. Opinion shopping has no effect on the acceptance of going-concern audit opinion. The previous year's audit opinion had a positive and significant impact on the going concern audit opinion acceptance. Disclosure has no effect on the acceptance of going concern audit opinion.

Factors Affecting The Acceptance of Going Concern Audit Opinions (Study on Companies Listed on IDX)

This study aims to investigate the variables that affect how going concern opinions are received. The variables include audit quality, company size, and debt default. The research method is quantitative. The research population is companies in the property, real estate, and building construction sectors that are listed on the Indonesia Stock Exchange. The sampling method is purposive sampling and samples are taken 64 observation data. The study's findings demonstrate that audit quality has no impact on the likelihood of receiving going-concern audit opinions, whereas firm size has a positive impact on the likelihood of receiving going-concern audit opinions. Debt default has no impact on the likelihood of receiving going-concern audit opinions.

Lebanon: Financial crisis or national collapse?

Lebanon’s collapse is of unprecedented magnitude relative to its economy. The crisis combines a foreign debt default, a currency devaluation and banking sector bankruptcy in a “perfect storm” unseen since the 19th century, according to the World Bank. More than an economic collapse, its consequences are threatening the survival of the country as we know it. Lebanon’s crisis is no accident. Many date the start of the collapse to October 2019 and the popular uprisings in the country. Most citizens are in denial, unable to grasp the depth of the economic and financial losses they face. But the sources of the collapse can be found earlier, at the end of the 1990s. The currency peg fixed in 1997 allowed deficits to accumulate that have been unsustainable since 2016. More than a financial crisis, it is the end the economic and social contract established in 1989 to end the civil war.

Risk Measurement of Local Government Debt Based on Complex Networks: Taking China’s Urban Investment Bonds as an Example

For many countries, the systemic risk of local government debt is a matter of concern, but at present, there is little analysis in this area. The complex network based on information analysis provides an effective tool for analyzing the system risk between networks. This paper takes China as an example and takes the provincial urban investment bonds as the object for research. The regional network constructed with the interest rate data of urban investment bonds represents the overall systemic risk of these bonds. The main conclusions are as follows: provincial nodes in western and central areas (underdeveloped areas) are more important in the system, and they are more easier to form debt defaults. For an interconnected urban investment bond network, the higher the default risk of an individual, the greater the risk of the entire system. Finally, based on the indicators obtained from the provincial urban investment bond network model, this paper puts forward policy suggestions for the prevention of urban investment bond risks.

Does Debt Have Threshold Effects on Medium-Term Growth? Evidence from European Union Countries

Abstract Debt has become an important factor in economic activity and its extent has incentivized many researchers to incorporate it into contemporary growth models. On the positive side, debt has the ability to smoothen private consumption, firms’ investment and government expenditure in relation to their corresponding income, subsequently leading to better capital allocation. However, the history of debt defaults and lessons from European sovereign debt crises, which were accompanied by strict austerity measures, have warned us about the danger of debt overhang and unsustainable debt burdens. This paper tackles the question of the existence of a turning point, at which the negative effects of debt start to prevail in the economic process. In the sample of European Union countries in the period from 1995 to 2019, the author of this paper investigated the presence of threshold effects of government, non-financial corporate and household debt on medium-term growth following the paper by Mika and Žumer (2017). The author first confirmed the concave-shaped relationship between public debt and growth with a threshold of 111.6% of GDP, based on Eurostat debt-to-GDP data. In contrast, private debt was found to have first lag effects with an accompanied convex-shaped relationship between private debt and growth and with a corresponding threshold of 149.8% of GDP. Next, the author divided private debt into non-financial corporate and household debt to investigate a more detailed relationship between debt and growth. Corresponding to the Global Debt Database, the concave-shaped relationship between public debt and growth was confirmed with a threshold of 104.8% of GDP. Both of the investigated types of private debt confirmed the previously explored lagged impact on medium-term growth and a convex-shaped relationship between non-financial corporate and household debt and growth. The threshold of non-financial corporate debt stands at 138.3% of GDP, while that for household debt is 145.1% of GDP. Considering the presence of thresholds may offer an important message to economic policymakers, as timely and suitable governance can lead to either higher economic growth or prevent adverse effects of excessive indebtedness.