Financial Distress Research Articles

Open Strategy as Turnaround: The Impact of Openness in Restructuring Under Financial Distress

Open Strategy as Turnaround: The Impact of Openness in Restructuring Under Financial Distress

Parents Financial Distress and Time Allocation with Youths Responsible for Increasing Trends of Risky Behaviours among Youths in Mumbai Metropolitan Region

Youths are powerful economic agent for any nation. An educated, healthy, hardworking youths are human asset for nation, society, and family in long term. Youths must have trained with quality education. It is job of government, families, and society to ensure that they will acquire maximum skills, knowledge, healthy behaviour, nutritional status. But male youths are driving four wheelers and female drive two wheelers without proper license and trend is increasing since 2013 to 2023. The smoking, alcohol consumption has increased among males. Youths are more depressed in region. They fight physically more and do not eat healthy diet. The incidence of risky behaviours became double in a decade. Few youths involved in multiple sex with opposite sex relationship with lack of understanding and use of contraceptives. Logistic regression model 2013 survey shows that multiple risky behaviours are co-related to youths walk to college, spend more time in college, travel by train and car. But 2023 survey, shows that multiple risky behaviours are co-related to age of youths, loans taken by parents. The role of parents is important in controlling risky behaviours such as risky driving, smoking cigarettes, drinking alcohol, depression, and opposite sex relationship. Parents must teach youths nutritious food habits, traffic rules, no smoking and alcohol, physical fight. Long term policies for youths and parents required to reduce risky behaviours on urgent basis in Mumbai Metropolitan Region.

Financial Distress: Ratio of Financial Statements of Mining And Metals Companies

This research aims to determine the influence of profitability, leverage and liquidity on financial distress in the mining and metals company sub-sector in Indonesia during the 2018-2022 Period. Profitability is measured using Return on Assets (ROA), leverage is measured by Debt to Equity Ratio (DER), and liquidity is measured using Current Ratio (CR). Financial distress was identified using the Altman Z-score model. This type of research is a quantitative research sampling in this study using purposive sampling techniques and data that has been processed for this study as many as 11 Mining and Metal companies listed on the Indonesia Stock Exchange. The data source in this study uses a secondary data source sourced from the Annual Report published by mining and metals companies listed on the Indonesia Stock Exchange. The data analysis used in this study used Descriptive Satistic analysis, Pooled Data, Chow Test, Hausman Test, Fixed Effect, Partial Test, Determination Coefficient Test (R2). The test results showed that the Return on Asset (ROA) variable, Debt to Equity ratio (DER), did not have a significant effect on financial distress, while the Current Ratio (CR) had a significant effect on financial distress in Mining and Metal Companies listed on the Indonesia Stock Exchange in 2018-2022. The Result of this study is that profitability, leverage, and liquidity significantly affect the condition of financial distress in mining and metals sub-sector companies in Indonesia.

Corporate financial distress prediction in a transition economy

AbstractForecasting financial distress of corporations is a difficult task in economies undergoing transition, as data are scarce and are highly imbalanced. This research tackles these difficulties by gathering reliable financial distress data in the context of a transition economy and employing the synthetic minority oversampling technique (SMOTE). The study employs seven different models, including linear discriminant analysis (LDA), logistic regression (LR), support vector machines (SVMs), neural networks (NNs), decision trees (DTs), random forests (RFs), and the Merton model, to predict financial distress among publicly traded companies in Vietnam between 2011 and 2021. The first six models use accounting‐based variables, while the Merton model utilizes market‐based variables. The findings indicate that while all models perform fairly well in predicting results for nondelisted firms, they perform somewhat poorly in predicting results for delisted firms in terms of various measures including balanced accuracy, Matthews correlation coefficient (MCC), precision, recall, and score. The study shows that the models that incorporate both Altman's and Ohlson's variables consistently outperform those that only use Altman's or Ohlson's variables in terms of balanced accuracy. Additionally, the study finds that NNs are generally the most effective models in terms of both balanced accuracy and MCC. The most important variable in Altman's variables as well as the combination of Altman's and Ohlson's variables is “reat” (retained earnings on total assets), whereas “ltat” (total liabilities on total assets) and “wcapat” (working capital on total assets) are the most important variables in Ohlson's variables. The study also reveals that in most cases, the models perform better in predicting results for big firms than for small firms and typically better than in good years than for bad years.

Pengaruh Debt Default, Financial Distress, dan Auditor Switching Terhadap Penerimaan Opini Audit Going Concern

Researching infrastructure companies traded on the Indonesia Stock Exchange (BEI) in 2022 and 2023, this research will examine the impact of debt default, financial distress, and auditor switching on the approval of going concern audit opinions. A quantitative technique based on descriptive methodology was used in this investigation. Using IBM SPSS Version 29, this research used logistic regression analysis as its data analysis technique. This study found that the acceptance of going concern audit opinions is substantially affected solely by financial distress. There were no notable results from the debt default and auditor switching.

Pengaruh Operating Capacity dan Working Capital Turnover Terhadap Financial Distress

Financial distress is a decline in a company's financial condition that occurs before bankruptcy or liquidation, which begins with the company's inability to fulfill its obligations. Based on data on the Indonesian Stock Exchange, several companies have experienced bankruptcy for two consecutive years in mining sector companies in 2019-2022. The aim of this research is to determine the effect of operating capacity and working capital turnover on financial distress. This type of research is quantitative with documentation methods. The total population is 86 companies with a sample of 39 companies. The sample was selected using a purposive sampling method, the data used were the annual financial reports of various mining sectors for the 2019-2022 period. Data analysis uses classical assumptions, T test and F test and multiple linear regression analysis using the Altman Z-Score method. The results of this research show that operating capacity has a positive and significant effect on financial distress and working capital turnover has no significant effect on financial distress.

Determinan Struktur Modal Perusahaan yang Terdaftar di JII70

Capital structure policy is a core financing decision for a company that affects company value. Companies need to be careful in determining where the source of financing comes from, whether from debt or equity sourced from their own funds or from the issuance of shares. Wrong capital structure policies can lead a company into financial distress and bankruptcy. Over the last five years, more and more companies have obtained financing through the issuance of shares on the sharia stock market. The number of investors investing their funds in this market has also increased. Based on this, the aim of this research is to find out and understand what the factors of company characteristic that effect the capital structure in companies listed on the Jakarta Islamic Index 70 (JII70) during the 2018-2022 period. This study uses a quantitative approach. The model used is dynamic panel data regression with the System-GMM as the analysis method. The data used is secondary data for the 2018-2022 period which comes from company financial reports collected through IDX (Indonesia Stock Exchange). The population in this study were 70 companies registered on JII70. The sampling method was purposive sampling. The number of samples selected was 29 companies. The results of hypothesis testing show that the factors of company characteristic that effect the capital structure are return on equity, profit margin, current ratio, and total asset turnover.

Pengaruh Financial Distress dan Opinion Shopping terhadap Penerimaan Opini Audit Going Concern: Studi Empiris pada Perusahaan Sektor Pertambangan Terdaftar di Bursa Efek Indonesia tahun 2018-2022

This study aims to examine the effect of financial distress, and opinion shopping on going concern audit opinion acceptance. The population in this study were all mining sector companies listed on the Indonesia Stock Exchange in 2018-2022. The sampling technique used is purposive sampling. The number of samples used in this study were 75 samples. Hypothesis testing is done by analyzing using data panel regression methods. The results showed that financial distress has a positive effect on going concern audit opinion acceptance, and opinion shopping has no effect on going concern audit opinion acceptance in mining sector companies listed on the Indonesia Stock Exchange in 2018- 2022.

Empowering women in central banking

ABSTRACT When are women appointed to the board of central banks? While progressive societal gender norms may facilitate women's ascension to leadership positions, recent research indicates that women are more likely to assume leadership positions during crisis periods. Because of the widely documented 'male dominance' in the policy domain of central banking, analyzing changes in women's descriptive representation on central bank boards provides a unique laboratory to study the role of women in economic policymaking. Building on previous literature on women's political leadership, we argue that sovereign debt crises are powerful catalysts for lifting women into leadership positions. We hypothesize that appointing women to central bank leadership positions during sovereign financial distress signals a policy change to bolster monetary policy credibility. Using data covering 90 countries from 2000 to 2017, we show that women are more likely to be appointed to central bank leadership positions during a sovereign debt crisis. A sovereign debt crisis increases the likelihood of women’s appointments to a central bank board by 21.1 percent. To mitigate concerns that our results are spurious, we implement a battery of robustness checks. Our study suggests that women's empowerment can be beneficial in restoring monetary policy credibility during sovereign financial distress.

Predicting financial distress through ownership pattern: dynamics of financial resilience of Bangladesh

In light of agency and resource dependence theories, we explored the impact of ownership patterns on the likelihood of financial distress using 57 financial institutions (FIs) listed in Dhaka Stock Exchange and 390 firm years from 2016 to 2022. This study observed that 97.94% of the firms are in distress, 1.03% in gray, and 1.03% in the safe zone. Thus, the stability of FIs lags quite behind the expected standards. Multiple linear regression results show that director ownership is inversely associated with corporate failures, suggesting higher stakes of directors lower the risk of financial distress. When directors align their interests with those of firms by owning shares, it enhances firm performance and lowers the likelihood of failures. Also, institutional ownership negatively correlates with financial distress due to their active surveillance and focus on long-term performance. Besides, effective overseeing process of institutional investors works as a deterrent to making freaky decisions. Conversely, foreign ownership showed a positive affinity with financial distress. In Bangladesh, family dominance, lopsided influence, and political connections limit foreign investors’ ability to contribute to a firm’s long-term success. While most earlier studies in emerging economies showed financial resilience through the Altman Z-score, only a few have examined ownership patterns as a potential cause of firm bankruptcy. Considering ownership patterns as an explanatory variable of financial distress, this study discourses the corporate governance issues and resilience of FIs in an emerging economy.

The Influence of Audit Characteristics and Company Characteristics on Audit Report Lag

This study investigates the impact of audit characteristics, including Audit Opinion, Audit Industry Specialization, and Audit Reputation, along with company characteristics such as Company Age and Financial Distress, on Audit Report Lag in non-primary consumer sector companies listed on the Indonesian Stock Exchange from 2011 to 2022. Analyzing data from 61 companies over 12 years with 732 observations, the research employs multiple linear regression analysis in EViews12. Findings reveal that collectively, audit opinion, industry specialization, audit reputation, company age, and financial distress significantly influence Audit Report Lag. Specifically, audit opinion, industry specialization, audit reputation, and financial distress exhibit a negative impact on Audit Report Lag, while company age has a positive effect. The study recommends future research to explore other sectors and include internal company variables like independent commissioners and institutional ownership for a more comprehensive analysis. The focus solely on auditor-related variables suggests avenues for broader investigations into internal company dynamic

A New Pre-Incorporation Roadmap to Support the Reduction of Insolvency Numbers?

There is a plethora of sources in England and Wales governing corporate insolvencies for directors of limited companies in financial distress or approaching or entering the insolvency process, together presenting to the company director a legislative framework lacking in coherence. There is also a lack of consistency in common law judgments, resulting in a lack of certainty for a director facing potential ruin if held personally liable.None of these factors support the UK government’s claimed rescue culture, which statistics show is failing. This is of increasing importance: the Covid-19 pandemic has already resulted in a wealth of companies in financial distress in a wide range of sectors.Access to limited liability is not a right, it is a benefit, one that can adversely impact on creditors when companies are struggling; it is only right that the obligations that come with enjoying that access are clearly defined, governed and managed. The authors present an alternative pre-incorporation roadmap for legislators and directors, aimed both at supporting the government’s rescue culture and leaving entrepreneurs free to leverage their knowledge to maximise shareholder returns, rather than worrying about safeguarding their own positions in relation to directorial duties and obligations during periods of financial distress.

Effect of Debt Policy And Company Performance With Leverage As Moderation

This research aims to determine the role of leverage as a moderating variable in the influence of debt policy on company performance. This research uses quantitative methods with secondary data obtained from the Indonesia Stock Exchange website and the company's official website. The population in this research is food and beverage companies in the consumer goods industry sector listed on the Indonesia Stock Exchange in 2019-2021. Panel data regression analysis testing uses STATA 17. The analytical method used is multiple regression analysis (MRA). The results of this research show that: 1) Debt policy has a negative effect on company performance. Excessive use of debt causes an increase in the company's risk in generating profits and will cause shareholders to doubt the company's ability to pay the debt that has been given. This shows that the higher the debt a company has with a large amount of debt, the higher the company's risk will be and this will result in decreased financial performance, because higher debt will cause financial distress. 2) Leverage weakens the relationship between debt policy and company performance. Leverage weakens the influence of the negative relationship, which shows that the DOL functions well in mitigating the negative impact of debt policy on company performance so that the negative influence of debt policy on company performance can be reduced or weakened

Rates and psychological stress predictors of problematic internet use (PIU) during the COVID-19 pandemic in a racially diverse sample of young adults

ABSTRACT Background Problematic internet use (PIU), which includes social media misuse (SMM) and gaming misuse (GM), is uncontrollable and associated with significant psychological impairment. PIU is a coping behavior for COVID-19-related stress. We explored distress-related predictors of PIU in a young adult racially diverse sample during the pandemic. Methods Analyses used cross-sectional survey data (N = 1956). Psychological diagnoses, financial distress, COVID-19-related emotions, psychological distress, distress tolerance, social support, loneliness, SMM and GM were measured. Hierarchical multiple regressions identified predictors of PIU. Race-stratified exploratory analyses sought to understand if predictors held true across racial groups. Results Low distress tolerance was associated with SMM and GM, as were depression symptoms, with racial differences observed. SMM was associated with younger age, and GM was associated with male gender. PTSD symptoms predicted more GM. SMM and GM rates varied between racial groups. COVID-19-related adjustment challenges and stress predicted SMM and GM respectively, with racial differences observed. Conclusion Individual psychological distress and low distress tolerance markedly increased PIU risk. Clinicians should screen for stress-related PIU risk factors and bolster distress tolerance in vulnerable patients. Comparing PIU to different forms of coping in a larger sample would further clarify groups differences in stress coping behaviors.

Finding the Balance: Practices to Leverage Open Strategy in Restructuring Under Financial Distress

Finding the Balance: Practices to Leverage Open Strategy in Restructuring Under Financial Distress

Analisis Pengaruh Likuiditas dan Profitabilitas terhadap Financial Distress Menggunakan Model Altman Z-Score

Analysis of financial distress is carried out to identify early signs of financial difficulties experienced by the company. Determining the number of samples used the purposive sampling method. The type of data used is secondary data obtained from the source www.idx.co.id. The analytical method used is statistical analysis consisting of descriptive statistical analysis, multiple linear regression analysis, classical assumption testing, and hypothesis testing. The results of partial hypothesis testing stated that liquidity measured by the current ratio had no significant effect on financial distress with a tcount value of 2.010 > ttable 1.70562 and liquidity measured by the quick ratio had no significant effect on financial distress with a tcount value of -0.027 < ttable 1.70562. while profitability measured by return on assets has a significant effect on financial distress with a value of tcount 5.453 > ttable 1.70562 and profitability measured by return on equity has no significant effect on financial distress with a value tcount < ttable or 1.201 < 1.70562. The research results of simultaneous hypothesis testing stated that liquidity and profitability simultaneously had a significant effect on financial distress with a value of fcount > ftable or 16.355 > 2.98. The research results show that the coefficient of determination (Adjusted R Square) is 0.679, which means that the influence of the liquidity and profitability variables on financial distress is 67.9%.

Financial distress and earnings management: evidence from non-financial companies listed on the Ho Chi Minh Stock Exchange

The study examines the impact of financial distress on earnings management for Vietnamese non-financial companies. The System Generalized Method of Moments was employed to estimate a dynamic panel data model. Data were collected from non-financial companies listed on the Ho Chi Minh Stock Exchange from 2011 to 2020. The results show that financial distress has a positive impact on earnings management. Specifically, enterprises with good financial health and low risk of bankruptcy tend to make upward profit adjustments, while financially distressed enterprises tend to make downward profit adjustments. This may be due to the supervisory pressure of auditors and creditors, which makes the most affected enterprises no longer have the opportunity to undertake profit manipulation. At the same time, a company with high operating performance tends to maintain profit growth to impress investors in the market. The study results warn policymakers, enterprises, and investors when even financially sound enterprises are incentivized to undertake earnings management. This paper provides additional evidence that financial distress is positively associated with earnings management, which contradicts the findings of some prior studies.

The Role of Real Earnings Management (REM) in The Relationship between Financial Distress and Tax Planning

The Role of Real Earnings Management (REM) in The Relationship between Financial Distress and Tax Planning

Capital structure and performance nexus: Insights from fixed-effects and quantile analysis

The research utilizes a comprehensive dataset from MENA-listed companies, capturing data from 2013 to 2022 to scrutinize the influence of capital structure (CapSt) level on corporate performance across 11 distinct countries. This study analyzed 6870 firm-year observations using a quantitative research method through static and dynamic panel data analysis. The primary analysis reveals a positive correlation between the CapSt ratio and company performance using fixed effects (FE) techniques. Hence, the preliminary results were re-examined and affirmed using a two-step system generalized method of moment (GMM) estimator to address potential endogeneity concerns. This finding aligns with most studies conducted in advanced countries, indicating a positive correlation between CapSt and corporate performance. Furthermore, it is also consistent with some research conducted in less-developed markets. This research argues that, in the MENA region, the advantages of debt, such as tax saving, may outweigh the potential financial distress cost. Furthermore, it offers insights into the monitoring role of CapSt in MENA-listed companies. We strengthen our research results by employing various methodologies and using alternative measures of accounting performance and controlling size, notably panel quantile regression analysis.

The Effect of Liquidity, Sales Growth and Firm Size on Financial Distress in Manufacturing Companies in Various Industrial Sectors Listed on the Indonesian Stock Exchange for the 2020 - 2022 Period

The Effect of Liquidity, Sales Growth and Firm Size on Financial Distress in Manufacturing Companies in Various Industrial Sectors Listed on the Indonesian Stock Exchange for the 2020 - 2022 Period