Title: An Empirical Study on the Impact of Financial Distress on Corporate Performance
Abstract: Selecting industry-adjusted debt ratio as proxy variable of financial distress,this study examines the relation between financial distress and corporate performance in China's listed firms,and finds that firms in the top deciles in economic distress see their sales and profits declines by 6% and 7% respectively,more than do firms in the bottom deciles.In other words, highly leveraged firms lose more market share and profits in industry downturns than their counterpart that conservatively financed. This paper provides new evidence for financial distress cost.
Publication Year: 2005
Publication Date: 2005-01-01
Language: en
Type: article
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