An investigation of factors affecting financial distress: analysis among PN17 companies in bursa Malaysia / Suhaily Maizan Abdul Manaf, Nor Farah Hanim Amzah and Wan Anisabanum Salleh

Financial distress is a condition of problems in corporate.financing, in which there is a means of inability to pay to a creditor and is at risk of bankruptcy in the future. Those publicly listed companies having.financial problems and any related issues will fall under Practice Note 17 (PNl 7). To have a better understanding, this study has aimed to examine the factors affecting.financial distress among the PNl 7 companies in Bursa Malaysia for ten years of analysis, using data from 2008 to 2017. A total of 154 observations have been taken from 17 companies by using the Pooled Ordinary Least Square (POLS) and Random Effect Model (Breusch and Pagan Lagrangian Multiplier Test). Profitability, si:,e of.fi rm, sales
growth, liquidity, and leverage have been chosen as independent variables, while total debt acts as a dependent variable for this investigation. Findings suggest that liquidity, si:,e of firm, and leverage have a significant impact on .financial distress, while profitability and growth sales have it in the other direction. A further implication is that it is beneficial for those companies and investors to make wise decisions on short- and long-term investments towards their shareholdings.
Keywords: Financial distress, Random Effect Model, PNl 7 companies.