Financial Health & Corporate Performance: A Comparison of Manufacturing Companies in China

Foo See Liang and Shaakalya Pathak

Journal of Asian Development, 2018, vol. 4, issue 2, 123-132

Abstract: The People¡¯s Republic of China (China) is a key leading economy in the Asia Pacific region. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in this market. A linear regression has been conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a five-year period have also been analysed. The analysis covers the period from 2013 to 2017 (inclusive) and yields a statistically positive correlation between ROE and the Z-Score for the market. China registered moderate-to-strong mean and median Z-Scores. These findings further support the strong economic position of this market as an Asian giant.

Keywords: Financial health; corporate performance; manufacturing; Altman Z-Score; return on equity (search for similar items in EconPapers)
Date: 2018
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