TAILIEUCHUNG - Modeling of financial distress probability for Vietnamese listed companies

Modeling of financial distress probability for Vietnamese listed companies. To date, an in-depth discussion of the factors influencing financial distress in Vietnam is still lacking. This paper explores the determinants of corporate financial distress of Vietnamese firms listed on the Hochiminh Stock Exchange using a dynamic logit model. | Journal of Economics and Development, , , December 2014, pp. 68-81 ISSN 1859 0020 Modeling of Financial Distress Probability for Vietnamese Listed Companies Phu Kim Yen Foreign Trade University, Hochiminh City Campus, Vietnam kimyen2091992@ Nguyen Manh Hiep Foreign Trade University, Hochiminh City Campus, Vietnam Abstract To date, an in-depth discussion of the factors influencing financial distress in Vietnam is still lacking. This paper explores the determinants of corporate financial distress of Vietnamese firms listed on the Hochiminh Stock Exchange using a dynamic logit model. We find that financially distressed enterprises have highly leveraged capital structures with low liquidity and low profitability. The financial distress probability is more pronounced for firms with small capitalization as well as those newly established and less profitable. With the hope of improving market efficiency, we finally come up with a simple, convenient model which helps investors estimate a firm’s financial distress probability without information cost. Keywords: Financial distress; emerging market; logit regression. Journal of Economics and Development 68 Vol. 16, , December 2014 1. Introduction Hochiminh Stock Exchange. Over recent years, the topic of “financial distress estimation” has developed a major research domain in corporate finance. Many academic studies have been dedicated to the search for the best corporate failure prediction model. Moreover, from their point of view, economists around the world have tried to define “financial distress” in different ways. Beaver (1966) defines this economic term as the “inability of a firm to pay its financial obligations as they mature”. This definition is similar to those found in the later studies of Andrade and Kaplan (1998) and Brown et al. (1993). On the other hand, Whitaker (1999) believes that financial distress can be realized when the firm’s cash flow is less than the

• Quản trị kinh doanh
• Modeling of financial distress
• Financial distress probability
• Vietnamese listed companies
• Listed companies
• The factors influencing financial distress
• Finance accounting and Auditing
• Accounting policies
• Financial distress
• Ordinary Least Squares (OLS)
• Professional judgment