Open AccessFactors Contributing to Financially Distressed Companies in Malaysia
Author(s) -
Nur Adiana Hiau Abdullah,
Rohani Rus,
Abd Halim Ahmad
Publication year - 2009
Publication title -
international journal of management studies
Language(s) - English
Resource type - Journals
eISSN - 2232-1608
pISSN - 2180-2467
DOI - 10.32890/ijms.16.2.2009.9978
Subject(s) - logit , logistic regression , default , business , econometrics , debt , return on assets , asset (computer security) , actuarial science , statistics , economics , finance , mathematics , computer science , profitability index , computer security
By using a total of 52 distressed and non-distressed listed companies during the period 1990 to 2000, debt to total assets was found to be signifi cant in predicting distressed companies for the multiple discriminant analysis (MDA), logit and hazard models. It appears that the higher the debt, the higher is the probability of defaulting among the fi nancially distressed companies. MDA identifi ed net income growth as another predictor whereas the logit and hazard model found that return on asset (ROA) to be an important predictor. Nevertheless, the sign of the ROA coeffi cient diff erred between the two models. Furthermore, company size was also identifi ed as a contributing factor to fi nancially distressed companies for the hazard model.
Accelerating Research
Robert Robinson Avenue,
Oxford Science Park, Oxford
OX4 4GP, United Kingdom
Address
John Eccles HouseRobert Robinson Avenue,
Oxford Science Park, Oxford
OX4 4GP, United Kingdom