Open AccessFinancial Health & Corporate Performance: A Comparison of Manufacturing Companies in China
Author(s) -
Foo See Liang,
Shaakalya Pathak
Publication year - 2018
Publication title -
journal of asian development
Language(s) - English
Resource type - Journals
ISSN - 2377-9594
DOI - 10.5296/jad.v4i2.13839
Subject(s) - china , return on equity , equity (law) , business , position (finance) , economics , finance , geography , political science , archaeology , law , stock exchange
The People’s Republic of China (China) 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. 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. China registered moderate-to-strong mean and median Z-Scores. These findings further support the strong economic position of this market as an Asian giant.