scholarly journals The Role of Banks in Reducing the Costs of Financial Distress in Japan

10.3386/w3435 ◽  
1990 ◽  
Author(s):  
Takeo Hoshi ◽  
Anil Kashyap ◽  
David Scharfstein
Keyword(s):  
Financial Distress

scholarly journals The Role of Board Independence and Ownership Structure in Improving the Efficacy of Corporate Financial Distress Prediction Model Evidence from India

2021 ◽  
Vol 14 (7) ◽  
pp. 333
Author(s):  
Shilpa H. Shetty ◽  
Theresa Nithila Vincent
Keyword(s):  
Prediction Model ◽  
Ownership Structure ◽  
Financial Distress ◽  
Prediction Models ◽  
Receiver Operating Curve ◽  
Financial Measures ◽  
Financial Variables ◽  
Financial Distress Prediction ◽  
Distress Prediction

The study aimed to investigate the role of non-financial measures in predicting corporate financial distress in the Indian industrial sector. The proportion of independent directors on the board and the proportion of the promoters’ share in the ownership structure of the business were the non-financial measures that were analysed, along with ten financial measures. For this, sample data consisted of 82 companies that had filed for bankruptcy under the Insolvency and Bankruptcy Code (IBC). An equal number of matching financially sound companies also constituted the sample. Therefore, the total sample size was 164 companies. Data for five years immediately preceding the bankruptcy filing was collected for the sample companies. The data of 120 companies evenly drawn from the two groups of companies were used for developing the model and the remaining data were used for validating the developed model. Two binary logistic regression models were developed, M1 and M2, where M1 was formulated with both financial and non-financial variables, and M2 only had financial variables as predictors. The diagnostic ability of the model was tested with the aid of the receiver operating curve (ROC), area under the curve (AUC), sensitivity, specificity and annual accuracy. The results of the study show that inclusion of the two non-financial variables improved the efficacy of the financial distress prediction model. This study made a unique attempt to provide empirical evidence on the role played by non-financial variables in improving the efficiency of corporate distress prediction models.

scholarly journals Telaah Literatur Tentang Faktor-Faktor yang Mempengaruhi Konservatisme Akuntansi

2012 ◽  
Vol 8 (2) ◽  
Author(s):  
Lia Alfiah Dinanar Hati
Keyword(s):  
Conflict Of Interest ◽  
Financial Distress ◽  
Accounting Conservatism ◽  
Litigation Risk ◽  
Political Costs

This paper examine several factor that impact to accounting conservatism practice. Conservatism is commonly defined as the differential verifiability required for recognition of profits versus losses. Regardless of the different opinion about role of accounting conservatism, in fact, this principle is still in uses until now and be one of the dominant principle in accounting. Through this article the author do review of several previous studies about accounting conservatism at Indonesia and other country. From several review we conclude that accounting conservatism is affected by factors of contracting, litigation risk, political costs, regulations, financial distress and conflict of interest between shareholders and bondholders.

scholarly journals Impact Size and Determinants of Indirect Cost of Financial Distress: Role of Receivable and Inventory Management

2020 ◽  
Vol 16 (2) ◽  
pp. 179-207
Author(s):  
Umar Farooq ◽  
Muhammad Ali Jibran Qamar ◽  
Krishna Reddy
Keyword(s):  
Indirect Cost ◽  
Inventory Management ◽  
Financial Distress ◽  
Multi Stage ◽  
Initial Stage ◽  
Non Linear ◽  
Management Policies ◽  
Internal Operations ◽  
The Impact

This research investigates the opportunity cost as an indirect cost of financial distress from two perspectives. First, indirect cost is estimated using multi-stage financial distress and non-linear proxy of debt. Second, receivable and inventory management are studied as determinants of indirect cost. The sample includes ongoing Pakistani firms that were healthy in the previous year and documenting positive gross profit. Results showed that firms bear opportunity loss primarily due to leverage rather than multistage financial distress. However, a non-linear relationship is found between leverage and indirect cost. Results further explored the impact of multistage financial distress on internal operations, i.e., working capital policies. It is found that firms manage receivable and inventory simultaneously during the multistage financial distress. Results revealed that increasing receivables and decreasing inventory is suitable during the transition of healthy firms to initial stage of financial distress, i.e., profit reduction. However, decreasing receivables, along with holding more inventory, is recommended for healthy firms that face liquidity problems subsequently. It is concluded that managers can reduce the indirect cost after deploying the optimal debt ratio and recommended receivable and inventory management policies.

The Distress Anomaly is Deeper than you Think: Evidence from Stocks and Bonds

2021 ◽  
Author(s):  
Doron Avramov ◽  
Tarun Chordia ◽  
Gergana Jostova ◽  
Alexander Philipov
Keyword(s):  
Credit Risk ◽  
Financial Distress ◽  
Corporate Bonds ◽  
Time Varying ◽  
External Financing ◽  
Earnings Expectations ◽  
Limits To Arbitrage

Abstract The distress anomaly reflects the abnormally low returns of high credit risk stocks during financial distress. Evidence from stocks and corporate bonds reinforces the anomaly and challenges rationales based on shareholders’ ability to extract value from bondholders, time-varying betas, lottery-type preferences, biased earnings expectations, and limits-to-arbitrage. Moreover, mispricing of distressed stocks and bonds is associated with excess investment and excess external financing. Potential real distortions are materially understated when assessed based only on equity mispricing. We emphasize the important role of corporate bonds in dissecting the distress anomaly, and show that the anomaly is an unresolved puzzle.

scholarly journals The relationship between financial distress and well-being: Exploring the role of self-employment

2020 ◽  
pp. 026624262096538
Author(s):  
Jenny Berrill ◽  
Damien Cassells ◽  
Martha O’Hagan-Luff ◽  
André van Stel
Keyword(s):  
Financial Distress ◽  
Employment Status ◽  
Well Being ◽  
Negative Association ◽  
Econometric Analysis ◽  
The Self ◽  
Negative Consequences ◽  
Self Employment ◽  
The Relationship

This article investigate the relationship between financial distress, well-being and employment status. Using several indicators of financial distress and of well-being, our econometric analysis shows that the negative association between financial distress and well-being is moderated by employment status in the sense that financial problems are more strongly associated with poor well-being for the self-employed compared to the wage-employed. Hence, when self-employed workers find themselves in a situation of financial distress, the negative consequences for their well-being are more severe. This is found to hold both for the self-employed with and without employees.

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