Bulls and Bears and Bankruptcy- An Early Warning of Distress

Eka Bertuah and Erlane K. Ghani*
Additional contact information
Eka Bertuah: Faculty of Economics and Business, Esa Unggul University, Jakarta, Indonesia
Erlane K. Ghani*: Faculty of Accountancy, Universiti Teknologi MARA, Malayasia

The Journal of Social Sciences Research, 2018, 962-969 Special Issue: 5

Abstract: This study examines possible indicators of financial distress: financial ratio; financial decision; the preferences of investors; and economic macro conditions. Based on these indicators, the model of financial distress was constructed using capital structure theory. The population in this study is manufacturing companies listed on The Indonesian Stock Exchange from 2003 to 2016. This study relies on the composite market index to detect whether the market is bullish or bearish using regression analysis time series. Then, the factor analysis and logistic regression are used. Models which predict financial distress in bearish markets are more accurate than in a bullish market. Investors, therefore, are more vulnerable ina bullish market. Equity financing will reduce the probability of financial distress in both bullish and bearish markets. This supports the pecking order theory in capital structure - when the companies need funding, an early funding alternative is to retain earnings.

Keywords: Bearish; Bullish; Financial distress; Early warning tools. (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.arpgweb.com/pdf-files/spi5.1-962-969.pdf (application/pdf)
https://www.arpgweb.com/journal/7/special_issue/12-2018/5/4 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arp:tjssrr:2018:p:962-969

Access Statistics for this article

The Journal of Social Sciences Research is currently edited by Dr. Paola Magnano

More articles in The Journal of Social Sciences Research from Academic Research Publishing Group Rahim Yar Khan 64200, Punjab, Pakistan.
Bibliographic data for series maintained by Managing Editor ().