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The idea behind the study was to answer the question: how costly is financial distress and what is an appropriate model in quantifying these costs for JSE listed entities? The objective was to find a sample of companies that were purely financially distressed on the bases of interest coverage and then to follow those through the resolution of the distress, to see what happened to them and to quantify how costly those factors were. The analysis was conducted through a robust regression exercise and a time series investigation. Quality control was done through outlier investigations and Benford law distribution to determine human influence on the financial statements. It was found that the average costs of financial distress for JSE listed companies is approximately 16.7% market value per annum. The South African appropriate model for JSE listed companies resulted in the cost of financial distress being inversely related to the change in investment policy, holding of liquid assets, size of an entity and Tobin’s Q ratio, but directly related to the economic effect, probability of financial distress and change in employment policy. / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

This study had a two-fold purpose. Firstly, to establish whether a model utilising a number of non-financial variables in conjunction with a model based on financial variables is able to provide a more accurate company financial distress model than a model based on financial variables only. Secondly, to reinforce the theoretical foundation of company financial distress and failure through an examination of existing studies in order to enhance insight into the financial distress and failure phenomenon. A phased approach was applied to identify a sample of 95 companies listed on the JSE. A questionnaire comprising 14 questions, divided into five broad categories based on the strategic capability of a subject company was employed. The published Director’s Report was used to evaluate the questions on a zero to five-point scale over a 10-year observation period. The relationship between the questionnaire test results and the De la Rey K-Score for the subject companies was tested utilising the Cramer’s V statistical test. The Cramer’s V test is a chi-square based measure of nominal association yielding a value between zero and one. A movement towards one indicates a strengthening relationship, in this instance, between the non-financial test result and the De la Rey K-Score. A movement towards zero is an indication of a weakening relationship. A limited test result in favour of a strengthening relationship was insufficient to prove that the primary objective of this study has been achieved. The secondary objective was achieved in view that this was an exploratory study. It is, against this background, that empirical research is recommended in order to prove that a model combining financial variables with true non-financial variables should provide a more accurate company distress prediction model. / Dissertation (MCom)--University of Pretoria, 2012. / Financial Management / unrestricted

The study examines six factors identified by previous studies as having the potential to influence the outcome of turnarounds of firms. The six factors identified are efficiency strategy, severity, free assets, size, changes on the top management and black economic empowerment (BEE). This study is based on the propositions that the identified factors will influence the turnaround outcomes of the firms that were restructured by the Industrial Development Corporation. A sample of 78 firms was obtained for the study. The sample consisted of 46 successful turnaround and 31 failed turnaround. Logistic regression was used to test the sample. A significant finding of this study is that BEE is the only factor that has a positive influence on the outcome of the turnaround. This study is of use in identifying factors are useful to take into account when considering turning around a firm. The results of the study differ with most of the literature reviewed. Copyright / Dissertation (MBA)--University of Pretoria, 2010. / Gordon Institute of Business Science (GIBS) / unrestricted

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Abstract The government, in assisting Taiwanese enterprises to compete in increasing globalization environment, imitated the European and American countries in establishing stock market, helped corporate bond issuance to finance capital projects, and in the 80¡¦s, allowed foreign investments to enter Taiwanese economy and gradually relaxing regulation to allow greater flexibilities. Because of this policy, Taiwanese Stock Market began to grow exponentially. The number of corporate IPOs mushroomed in great numbers. After 1997 Asian financial and economic crash severely damaged the market and economy. The idea of ¡§Get Rich Quick¡¨ from the West began to invade Taiwan. Many corporate upper management, especially the second generation owners of family enterprises with higher education in international financial operations, broke away from their core business operations and traditional values and began to focus on high risk investment products and speculative investment vehicles. They even use cross-shareholding of stocks, stock speculations, illegal loans and profit sharing, misleading and fraudulent financial reporting to expand their businesses. As the result of their negligence of risk management and miscalculations of economic conditions, corporations experienced severe cash crunch from investment losses and were unable to cover the cash shortage through over-leveraged assets and illegal corporate financial schemes. Many corporations crumpled, causing wide spread lay-off and significant losses by investing public. It also affects many upper, middle, and lower stream merchants, vendors, and financial institutions. The resulting chain reactions from corporate bankruptcies, reorganizations, and stock de-listings caused major ramifications in Taiwan¡¦s social, political, economic, and financial systemsDuring the more than ten years of past criminal investigations of illegal activities in public companies, the media, financial, legal and accounting experts all provided their suggestions in how to prevent these cases. However, other than providing some tabloid news on newspapers, it regrettably has not helped in assisting the investigations or in preventing new cases. This thesis summarizes the major financial and money laundering activities preventive measures, and criminal investigations in Taiwan. It will compare and analyze the various case backgrounds, methods of operations, ramifications, and legal consequences in order to find similar characteristics of these cases from past investigative experiences, evidence gatherings, money trail tracings, and legal procedures. From these analyses, the thesis will make conclusions and suggestions in hope of shortening the investigative process in future cases, so that the investigation can start on the right track immediately to prevent the domino effects on the stock market and economy and minimize damage on economic conditions, and to reach the goal of ¡§To Detect is to Prevent¡¨.

This thesis is based on the stock listing electronic companies in TSE and OTC. There are two purposes of this paper. First, to understand what the difference between failure and non-failure firms under financial factors and corporate governance indicators. And second, to compare with the different material frequency, the predictive ability and the correlation regarding the enterprise crisis reveals the variable whether has a difference. The experiment results show that: By independent-sample t test and logistic regression, we find that under the quarterly financial statements, the profit index is the most manifest factor and the next is debt ratio. The closer to the time of the distress, the more factors in operating efficiency that make the two kinds of the firms differ. Financial distress firms have the higher account receivable turnover rate. In corporate governance factors, the proportion of family members holdings and the rate of directors¡¦ shareholding are the most two important variables. The results from yearly financial reports are similar to which from quarterly financial statements. Profit index and liquidity index can be the prior indications to judge whether a firm gets financial crisis or not. In independent-sample t test, the cash flow from operation ratio and times interest earned are marked variables in the first and second year before bankrupt. The diversity of traditional financial index and the corporate governance variables between failure firms and normal firms are very obvious in the first year previous to failure. In corporate governance factors, the proportion of family members holdings and the extent of the shares as collateral by the board of directors are the most important variables. Regardless of yearly or quarterly financial statements, the closer to the time of the distress, the more different variables appear. The average percentage of correctly classified firms is 80.13% from the 8th to 5th quarter previous to the distress better than 2nd year previous to the distress. Compared with the average accurate prediction rate from the 4th to 1st quarter, the predicting ability from 1st yearly financial statement is better. But the 1st and 2nd accurate rate are 92.54% and 93.44%, the average is 93%. In other words, we can overcome the time lag and raise the predictive ability by using quarterly reports rather than yearly financial statements.

Written in the wake of the 2007-08 financial crisis, the following essays explore the nature and implications of firm-level financial distress. The first essay examines the external effects of financial distress, while the second and third essays examine its internal consequences. The first essay investigates the potential contagion effects of financial distress among retail firms using a novel measure of retailers' geographic exposure to one another and, in particular, to liquidated chain stores. The second essay draws on new, hand-collected data on firm-level layoff instances to look into the ways in which financial distress impinges on firms' employment behavior. Building on the second essay, the third essay considers financial market reactions to layoff decisions, particularly those resulting from financial strain. Each essay sheds additional light on the ways in which financial distress propagates through to affect the economy at large. Overall, the picture that emerges is one in which firm-level financial distress appears to be an important factor behind the long and protracted nature of the current economic recovery. / Economics