An Investigation of Thai Listed Firms' Financial Distress Using Macro and Micro Variables

Sunti Tirapat () and Aekkachai Nittayagasetwat
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Sunti Tirapat: Chulalongkorn University, Thailand
Aekkachai Nittayagasetwat: National Institute of Development Administration, Thailand

Multinational Finance Journal, 1999, vol. 3, issue 2, 103-125

Abstract: The emergence of the economic crisis in Thailand in 1997 is an interesting case for academic studies. Internationally, it had a contagion effect, spreading to countries in Asia and in other regions. Domestically, it caused a great many industrial and corporate bankruptcies. The Thai economy had been relatively stable since 1984. The recent development in 1997, however, produced a sudden economic slump resulting in closures of many Thai corporations. Using a logit regression, this study develops a macro-related micro-crisis investigation model. The significance of the model is in its ability to bridge a firm's sensitivity to macroeconomic conditions and its financial characteristics in order to explore a firm's financial distress. The findings indicate that macroeconomic conditions are critical indicators of potential financial crisis for a firm. The article shows that the higher a firm's sensitivity to inflation, the higher the firm's exposure to financial distress.

Keywords: bankruptcy; financial distress; prediction model; and Thailand crisis (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:mfj:journl:v:3:y:1999:i:2:p:103-125

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