Journal of Economics and Development, Vol. 16, No. 3, December 2014, pp. 68-81.
https://doi.org/10.33301/2014.16.03.04
https://doi.org/10.33301/2014.16.03.04
Modeling of Financial Distress Probability for Vietnamese Listed Companies
Abstract:
To date, an in-depth discussion of the factors influencing financial distress in Vietnam is still lacking. This paper explores the determinants of corporate financial distress of Vietnamese firms listed on the Hochiminh Stock Exchange using a dynamic logit model. We find that financially distressed enterprises have highly leveraged capital structures with low liquidity and low profitability. The financial distress probability is more pronounced for firms with small capitalization as well as those newly established and less profitable. With the hope of improving market efficiency, we finally come up with a simple, convenient model which helps investors estimate a firm’s financial distress probability without information cost.Keywords:Financial distress, emerging market, logit regression.
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