The Value Of Governance Variables In Predicting Financial Distress Among Small And Medium-Sized Enterprises In Malaysia
Predicting financial distress among SMEs can have a significant impact on the economy as it serves as an effective early warning signal. The study develops distress prediction models combining financial, non-financial and governance particularly ownership and board structures, on the likelihood o...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Asian Academy of Management (AAM)
2016
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| Subjects: | |
| Online Access: | http://eprints.usm.my/37376/ http://eprints.usm.my/37376/1/aamjaf120s16_04.pdf |
| _version_ | 1848878176735854592 |
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| author | Hiau Abdullah, Nur Adiana M. Ma'aji, Muhammad Hwei Khaw, Karren Lee |
| author_facet | Hiau Abdullah, Nur Adiana M. Ma'aji, Muhammad Hwei Khaw, Karren Lee |
| author_sort | Hiau Abdullah, Nur Adiana |
| building | USM Institutional Repository |
| collection | Online Access |
| description | Predicting financial distress among SMEs can have a significant impact on the economy
as it serves as an effective early warning signal. The study develops distress prediction
models combining financial, non-financial and governance particularly ownership and
board structures, on the likelihood of financial distress by using the logit model. The final
sample for the estimation model consists of 172 companies with 50% non-failed cases
and 50% failed cases for the period from 2000 to 2012. The prediction models perform
relatively well especially Model 3 that incorporates governance, financial and nonfinancial variables, with an overall accuracy rate of 93.6% and 91.2% in the estimated
sample and holdout sample respectively. This evidence shows that the models serve as
effective early warning signals which are beneficial for monitoring and evaluation
purposes. Controlling shareholder, number of directors and gender of managing director
are found to be significant predictors of financially distressed SMEs. |
| first_indexed | 2025-11-15T17:27:11Z |
| format | Article |
| id | usm-37376 |
| institution | Universiti Sains Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T17:27:11Z |
| publishDate | 2016 |
| publisher | Asian Academy of Management (AAM) |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | usm-373762017-11-14T02:30:59Z http://eprints.usm.my/37376/ The Value Of Governance Variables In Predicting Financial Distress Among Small And Medium-Sized Enterprises In Malaysia Hiau Abdullah, Nur Adiana M. Ma'aji, Muhammad Hwei Khaw, Karren Lee HD28-70 Management. Industrial Management Predicting financial distress among SMEs can have a significant impact on the economy as it serves as an effective early warning signal. The study develops distress prediction models combining financial, non-financial and governance particularly ownership and board structures, on the likelihood of financial distress by using the logit model. The final sample for the estimation model consists of 172 companies with 50% non-failed cases and 50% failed cases for the period from 2000 to 2012. The prediction models perform relatively well especially Model 3 that incorporates governance, financial and nonfinancial variables, with an overall accuracy rate of 93.6% and 91.2% in the estimated sample and holdout sample respectively. This evidence shows that the models serve as effective early warning signals which are beneficial for monitoring and evaluation purposes. Controlling shareholder, number of directors and gender of managing director are found to be significant predictors of financially distressed SMEs. Asian Academy of Management (AAM) 2016 Article PeerReviewed application/pdf en http://eprints.usm.my/37376/1/aamjaf120s16_04.pdf Hiau Abdullah, Nur Adiana and M. Ma'aji, Muhammad and Hwei Khaw, Karren Lee (2016) The Value Of Governance Variables In Predicting Financial Distress Among Small And Medium-Sized Enterprises In Malaysia. Asian Academy of Management Journal of Accounting and Finance, 12 (1). pp. 1-15. ISSN 1823-4992 http://web.usm.my/journal/aamjaf/12-s-4-2016.html |
| spellingShingle | HD28-70 Management. Industrial Management Hiau Abdullah, Nur Adiana M. Ma'aji, Muhammad Hwei Khaw, Karren Lee The Value Of Governance Variables In Predicting Financial Distress Among Small And Medium-Sized Enterprises In Malaysia |
| title | The Value Of Governance Variables In
Predicting Financial Distress Among Small
And Medium-Sized Enterprises In Malaysia |
| title_full | The Value Of Governance Variables In
Predicting Financial Distress Among Small
And Medium-Sized Enterprises In Malaysia |
| title_fullStr | The Value Of Governance Variables In
Predicting Financial Distress Among Small
And Medium-Sized Enterprises In Malaysia |
| title_full_unstemmed | The Value Of Governance Variables In
Predicting Financial Distress Among Small
And Medium-Sized Enterprises In Malaysia |
| title_short | The Value Of Governance Variables In
Predicting Financial Distress Among Small
And Medium-Sized Enterprises In Malaysia |
| title_sort | value of governance variables in
predicting financial distress among small
and medium-sized enterprises in malaysia |
| topic | HD28-70 Management. Industrial Management |
| url | http://eprints.usm.my/37376/ http://eprints.usm.my/37376/ http://eprints.usm.my/37376/1/aamjaf120s16_04.pdf |