Perceived Failure Symptoms: Evidence from an Emerging Capital Market

9 Pages Posted: 16 Aug 2006

See all articles by Zulkarnain Muhamad Sori

Zulkarnain Muhamad Sori

INCEIF, The Global University of Islamic Finance

Mohamad Ali Abdul Hamid

Universiti Putra Malaysia

Annuar Nassir

University Putra Malaysia

Date Written: August 2006

Abstract

This study uses questionnaire approach to identify: (i) corporate distress warning signals of listed firms in an emerging capital market, Malaysia, (ii) the importance of each warning signal in conveying information to stakeholders, and (iii) the timeliness of each signal in alerting the stakeholders that the company is financially distressed. One hundred fifty copies of questionnaire were mailed and seventy three percent responded. It is found that chief executive officers (CEO) and accountants are perceived as persons most qualified and able to identify failure symptoms relative to other stakeholders. However, shareholders were perceived as the least competent persons to identify warning signals of distressed firms. Both the qualitative and quantitative information was considered important in identifying financially distressed firms. The findings suggest that though the stakeholders perceived important distressed signals to identify potential failures, not all these perceived signals were considered timely enough for effective use.

Keywords: Corporate Failure, Warning Signal, Failure Symptoms, Distressed Firms and Qualitative Approach

JEL Classification: M40

Suggested Citation

Muhamad Sori, Zulkarnain and Abdul Hamid, Mohamad Ali and Nassir, Annuar, Perceived Failure Symptoms: Evidence from an Emerging Capital Market (August 2006). Available at SSRN: https://ssrn.com/abstract=924309 or http://dx.doi.org/10.2139/ssrn.924309

Zulkarnain Muhamad Sori (Contact Author)

INCEIF, The Global University of Islamic Finance ( email )

Lorong Universiti A
Kuala Lumpur, Kuala Lumpur 59100
Malaysia
+60376514173 (Phone)
8 (Fax)

HOME PAGE: http://www.inceif.org/

Mohamad Ali Abdul Hamid

Universiti Putra Malaysia ( email )

Selangor Darul Ehsan
Serdang, Selangor 43400
Malaysia

Annuar Nassir

University Putra Malaysia ( email )

Selangor Darul Ehsan
Serdang, Selangor 43400
Malaysia

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
430
Abstract Views
2,950
rank
72,168
PlumX Metrics