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Are firms with negative book equity in financial distress?

Ang, Tze Chuan 'Chewie' 2015, Are firms with negative book equity in financial distress?, Review of pacific basin financial markets and policies, vol. 18, no. 3, pp. 1-41, doi: 10.1142/S0219091515500162.

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Title Are firms with negative book equity in financial distress?
Author(s) Ang, Tze Chuan 'Chewie'
Journal name Review of pacific basin financial markets and policies
Volume number 18
Issue number 3
Start page 1
End page 41
Total pages 41
Publisher World Scientific Publishing
Place of publication Singapore, Asia
Publication date 2015-01-01
ISSN 0219-0915
Keyword(s) Negative book equity
operating performance
financial distress
bankruptcy
stock return
Summary © 2015 World Scientific Publishing Co. and Center for Pacific Basin Business, Economics and Finance Research. This study examines whether negative book equity (BE) firms are in financial distress by analyzing their operating performance, financial characteristics, distress risk, and survivability when they first report negative BE. Firms with small magnitude of negative BE (SNBE firms) suffer from persistent negative earnings and financial distress, while firms with large magnitude of negative BE (LNBE firms) experience a temporary non-distress related earnings shock. LNBE firms report consecutive years of negative BE, but have lower distress risk and failure rate than both SNBE and control firms. However, all negative BE stocks have abysmal returns subsequent to their first report of negative BE.
Language eng
DOI 10.1142/S0219091515500162
Field of Research 150201 Finance
150205 Investment and Risk Management
1502 Banking, Finance And Investment
Socio Economic Objective 970115 Expanding Knowledge in Commerce
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2015, World Scientific Publishing
Persistent URL http://hdl.handle.net/10536/DRO/DU:30080119

Document type: Journal Article
Collection: Department of Finance
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