A panel data analysis of the effect of financial ratios on the financial distress of Philippine publicly-listed corporations and the moderating roles of COVID-19 and board demographics

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ID: 284613
2024
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Abstract
Corporate failure happens for a variety of reasons. Since it does not occur instantaneously, firms need to look for warning signals of problems and devise strategies to manage their financial situation. Financial ratios and the board of directors’ (BOD) demographics have piqued the interest of numerous scholars as to their effect on financial distress of firms. More recently, the COVID-19 pandemic depressed most businesses globally. However, the investigation of these relationships in the Philippine context is still underdeveloped. Using data from 108 listed industrial, property, and service firms in the PSE, this study analyzed how financial ratios affect financial distress of Philippine firms and whether their relationships were moderated by the BOD demographics and the pandemic. The summary statistics and ANOVA showed that the firms’ financial ratios deteriorate as they become financially distressed and that the pandemic did not result in significantly different values after the event. Moreover, the panel data analysis revealed that financial distress is negatively affected by the liquidity, efficiency, and profitability ratios while it is positively affected by the solvency ratio. The BOD demographics moderated some relationships between the financial ratios and financial distress, while the pandemic did not have any moderating effect on any relationship. This study emphasizes the need to analyze the financial health of firms and formulate evidence-based plans to protect and preserve the stakeholders’ respective interests. Likewise, academics may implement necessary pedagogical revisions to the curriculum and researchers may identify potential future research directions.
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persistent_1760653177_68f16f794b6eb Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Delfin, Lourence Jr.
Journal Malay Journal
Year 2024
DOI
DOI not found
URL
https://animorepository.dlsu.edu.ph/etdm_acc/16
Keywords Keywords not found

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