The relevance of macroeconomic indicators in predicting financial distress of public listed firms in Malaysia / Nur Hidayati Sairin

Sairin, Nur Hidayati (2020) The relevance of macroeconomic indicators in predicting financial distress of public listed firms in Malaysia / Nur Hidayati Sairin. Masters thesis, Universiti Teknologi MARA.


Financial distress can be defined as an inability of companies to generate profit due to
excessive debt. The company that suffers from financial distress will cause them to fail
in many business operations that increase their probability of losing their capital from
the investors. There is ongoing debate about the relationship of macroeconomic
indicators toward financial distress. Concerning the various empirical findings, it has
been argued that the ability of macroeconomic indicator can give impact or influence
the companies to have financial distress problem or becoming bankrupt. Therefore, the

purpose of this study is to determine the impact of macroeconomic indicators on the Z-
score of financial distressed companies and to investigate whether the level of Z-score

of non – financial distress companies and sectorial can be influenced by the
macroeconomic indicators. This sample of this study consists of PN17 distress
companies and non-distressed companies from Bursa Malaysia with the selected
macroeconomic indicators such as gross domestic product, consumer price index,
producer price index, real interest rate and money supply. The data analysis was
conducted using data stretching from 2008 until 2017 and the analysis based on Static
Panel Data Analysis. The general findings suggested that both companies were able to
be influenced by the selected macroeconomic indicators for this study. The significance
of the study suggests that money supply was the most crucial macroeconomic indicator
as it able to influence all the sectors to have financial distress problems. Thus, the
implication of the study may help the company to have a closer look into this
macroeconomics indicators to sustain their existence in business while maintaining their
performance and profitability. Meanwhile, the government may collaborate with the
banking institution in controlling the money supply into our economy by implementing
effective strategies for controlling well on the producer price index especially when the
country is facing inflation.


Item Type: Thesis (Masters)
Email / ID Num.
Sairin, Nur Hidayati
Email / ID Num.
Thesis advisor
Salisi, Mohd Shamlie (Dr.)
Subjects: H Social Sciences > HG Finance > Financial management. Business finance. Corporation finance
Divisions: Universiti Teknologi MARA, Shah Alam > Faculty of Business and Management
Programme: Master of Science (Business Management)
Keywords: Financial distress; Altman z-score model; macroeconomic indicators; practice note 17 (PN17)
Date: September 2020
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