Understanding the Connection of Performance and Z-Scores for Manufacturing Firms in South Korea

Foo See Liang and Shaak Pathak

Journal of Asian Development, 2019, vol. 5, issue 3, 37-46

Abstract: South Korea 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. South Korea registered moderate 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: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:mth:jad888:v:5:y:2019:i:3:p:37-46

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