Factors Contributing to Financially Distressed Companies in Malaysia

Authors

  • Nur Adiana Hiau Abdullah College of Business Universiti Utara Malaysia, Malaysia
  • Rohani Md. Rus College of Business Universiti Utara Malaysia, Malaysia
  • Abd. Halim @ Hamilton Ahmad College of Business Universiti Utara Malaysia, Malaysia

DOI:

https://doi.org/10.32890/ijms2009.16.2.10

Keywords:

Financial distress, MDA, Logit, Hazard model

Abstract

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 significant 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 financially distressed companies. MDA identified 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 coefficient differred between the two models. Furthermore, company size was also identified as a contributing factor to financially distressed companies for the hazard model. 

 

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Published

28-12-2009

Issue

Vol. 16 No. 2 (2009): International Journal of Management Studies (IJMS) Vol. 16, No. 2 December 2009

Section

Articles

Research impact

Harvested 2026-09-08
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Identifiers DOI 10.32890/ijms2009.16.2.10

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