The Analysis of Causal Factors that Affect the Financial Stability and Stock Returns of Listed Companies on the Stock Exchange of Thailand
Article Sidebar
Main Article Content
Abstract
The objective of this study was to study the causal factors of financial performance and non-financial performance that affect the financial stability and stock returns of listed companies on the Stock Exchange of Thailand. The design of the research was quantitative and qualitative. The sample used in this study is a company listed on the Stock Exchange of Thailand between 2016 and 2020. There are 322 listed companies that meet the criteria in this study. The study used influence analysis using a linear structural equation model (Path Analysis). The study found that financial performance factors that have a positive influence on financial stability, that is, earnings per share growth rate and revenue growth rate, have a negative influence on financial stability, as do the non-financial factors that affect financial stability, such as prevention and anti-corruption and corporate governance, which have a positive direct effect on financial stability. It was also found that financial stability also has a positive direct effect on stock returns, i.e., stock price, price-earnings ratio, and capital gains yield. The qualitative research results are consistent with quantitative research, which the researcher developed as a financial stability assessment form for stakeholders to use in decision-making. For companies listed on the Stock Exchange of Thailand, factors affecting financial stability can be used as guidelines for remediation. Improve the financial structure or non-financial structures that may arise and have an effect on financial stability. Listed companies should pay attention to non-financial factors as well. Because of the financial factor, it may have the opportunity to arise from the management or decorate numbers in financial statements to make investors interested.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Views and opinions appearing in the Journal it is the responsibility of the author of the article, and does not constitute the view and responsibility of the editorial team.
References
Al-Kassar, T. A., & Soileau, J.S. (2012). Design and Applied Mathematical Model of Measuring Financial Performance Evaluation: Jordan Results. Oil Gas & Energy Quarterly, 60(3), 621-636.
Al-Kassar, T. A. & Soileau, J.S. (2014). Financial Performance Evaluation and Bankruptcy Prediction (Failure). Arab Economic and Business Journal, 9(2), 147-155.
Altman, E. I. (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. The Journal of Finance, 23(4), 589-609.
Amaral, J. M. (2019). Is Doing Good, Good for You? The Relationship Between Financial Distress and CSR: A Study on Southern Europe[Master of Science in Finance, University Católica, Portuguesa].
Beaver, W. (1966). Financial Ratio as Predictor of Failure. Journal of Accounting Research, 5, 77-111.
Campbell, J. Y., Polk, C., & Vuolteenaho, T. (2010). Growth or Glamour? Fundamentals and Systematic Risk in Stock Returns. The Review of Financial Studies, 23(1), 305-344.
Campbell, J.Y., Hilscher, J., & Szilagyi, J. (2011). Predicting Financial Distress and the Performance of Distressed Stocks, Journal of Investment Management, 9(2), 14-34.
Cihak, M., & Hesse, H. (2011). Islamic Mutual Funds’ Financial Performance and International Investment Style: Evidence From 20 Countries. The European Journal of Finance, 17(9-10), 829-850.
Darrat, A. F., Gray, S., Park, J. C., & Wu, Y. (2016). Corporate Governance and Bankruptcy Risk. Journal of Accounting, Auditing & Finance, 31(2), 163-202.
Deegan, C. (2009). Financial accounting theory. McGraw Hill.
Fedorova, E., Gilenko, E., & Dovzhenko, S. (2013). Bankruptcy Prediction for Russian Companies: Application of Combined Classifiers. Expert Systems with Applications, 40(18), 7285-7293.
Fich, E.M., & Slezak, S.L. (2008). Can Corporate Governance Save Distressed Firms from Bankruptcy? An Empirical Analysis, Review of Quantitative Finance and Accounting, 30(2), 225-251.
Gilson, S. (1989). Management Turnover and Financial Distress. Journal of Financial Economics, 25(2), 241-262.
Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (1998). “Multivariate data analysis.”. Prentice Hall.
Haniffa, R., & Hudaib, M. (2006). Corporate Governance Structure and Performance of Malaysian Listed Companies. Journal of Business Finance & Accounting, 33(7&8), 1034-1062.
Liberty, S.E., & Zimmerman, J.L. (1986). Labor Union Contract Negotiations and Accounting Choices. The Accounting Review, 61(4), 692-712.
Lin, K.C., & Dong, X. (2018). Corporate Social Responsibility Engagement of Financially Distressed Firms and Their Bankruptcy Likelihood. Advances in accounting, Elsevier, 43(C), 32-45.
Ng, S.T., Wong, J.M.W., & Zhang, J. (2011). Applying Z-score Model to Distinguish Insolvent Construction Companies in China. Journal of International Habitat, 35(4), 599-607.
Nguyen, V.C., Nguyen, T.N., Oanh Le, T.T., & Nguyen, T.T. (2019). Determining the Impact of Financial Performance Factors on Bankruptcy Risk: An Empirical Study of Listed Real Estate Companies in Vietnam. Investment Management and Financial Innovations, 16(3), 307-318.
Ningsih, P.T. & Rahayu. (2018). The Predict of Company Financial Performance Bankruptcy by Ratio, Stock and Z-Score (PT Main TBK). International Journal of Advanced Research, 6(7), 293-303.
Robu, I.B., Robu, M.A., Mironiuc, M., & Balu, F.O. (2014). The Value Relevance of Financial Distress Risk in the Case of RASDAQ Companies. Journal of Accounting and Management Information Systems, 13(4), 623-642.
Saji, T.G. (2018). Financial Distress and Stock Market Failures: Lessons from Indian Realty Sector. The Journal of Business Perspective, 22(1), 50-60.
Stock Exchange of Thailand. (2018). Corporate Governance Policy and Code of Conduct for Market Groups. Securities of Thailand 2021. https://www.set.or.th/en/listing/equities/common-stocks/overview
Tandiontong, M., & Sitompul, M. (2017). The Influence of Financial Distress Using Altman Z-Score, The Beta of Stocks and Inflation to
The Stock Return, Journal of Finance and Banking Review, 2(2), 21-27.
Taffler, R. J. (1983). The Assessment of Company Solvency and Performance Using a Statistical Model. Accounting and Business Research, 13(52), 295-307.
Venkataramana, N., Azash, S., & Ramakrishnaiah, K. (2012). Financial Performance and Predicting the Risk of Bankruptcy: A Case of Selected Cement Companies in India. International Journal of Public Administration and Management Research, 1(1), 40-56.
Vo, Hong Duc., & Nguyen, Minh Tri. (2014). The Impact of Corporate Governance on Firm Performance: An Empirical Study in Vietnam. International Journal of Economics and Finance, 6(6), 1-13.
Zandi, A., Faghani Makrani, K., & Fazeli, N. (2019). Test of Corporate Social Responsibility Engagement Based on Two Approaches to the Exchange Capital and the Moral Capital of Bankruptcy Likelihood. Management Accounting, 12(43), 67-75.