Financial Distress

The purpose of this study was to determine the effect of financial distress on investment behavior for the years of 2011 to 2016. The statistical population of the research is Tehran Stock Exchange. According to the systematic elimination method, 104 companies have been selected as the statistical sample. In this research, financial distress is independent variable and corporate investment behavior is dependent variable and investment opportunities is considered as interactive variable. The present research is an applied research and in terms of methodology is a correlational study. In this research, for collecting data and information, library method and in the research data section, financial statements, explanatory notes and monthly magazine of stock exchange, and in order to describe and print the data collected, descriptive and inferential statistics and to analyze the data, pre-test variance analysis, F-limmer test, Hausman test and Jarck-Bera test, and then multivariate regression test for confirmation and rejection of research hypotheses (EViews software) were used. The results showed that firms with less investment opportunities tend to be less likely to invest, in addition distressed financially firms with more investment opportunities are more likely to increase investment.

Considerable researches have been devoted to predicting financial distress by using financial ratios and there is a little knowledge about this issue and how report paragraphs and information may contribute to predict companies’ insolvency. The major purpose of this study is to explore the effects of audit report types, pre-opinion paragraphs, special emphasis paragraphs, and other explanatory paragraphs on financial distress among firms listed on the Tehran Stock Exchange. The research period is from 2011 to 2018 and the sample consists of 107 firms which are selected using a purposeful sampling method. Results of multiple regression analysis shows there is not any significant association between audit report type, the number of pre-opinion paragraphs, special emphasis paragraphs and other explanatory paragraphs with financial distress.

Multiplicity of the companies experiencing financial distress in different countries and as a consequence, their bankruptcy and the impacts on other companies have necessitated conducting research on methods of prediction of such conditions and also their effects on other companies in the market. In this regard, this research has investigated the financial distress spillover in the automobile supply chain companies. For doing so, the methods of default probability time series KMV and the distance from default of four supply chain companies of Iran Khodro and four supply chain companies of SAIPA were calculated. Then, the financial distress spillover in these two major companies was measured in separated models using multivariate GARCH model. The results of the default probability of Iran Khodro companies showed that the default probability with pause of Khodro on the default probability of supply chain companies was significant and negative in 10% level. The results for SAIPA supply chain companies revealed that the default probability with pause of Khaspa had an impact on default probability of Kaspa, Pask and Khazin in significance level of 10%.

Rising inflation in recent years has caused financial distress and many problems for companies. Most of these problems are affected by life cycle stages. One way out of these problems is to increase corporate social responsibility (CSR) performance. Therefore, our aim in this study is to investigate the effect of CSR performance on financial distress over the life cycle of the company for a period of 10 years. Data collection was done through the website of the Tehran Stock Exchange and related software for a sample of 112 companies during the period 2009 to 2019. The mathematical method (directional distance function) is used to evaluate the CSR performance, and the models of Berger et al., Almida, Campello, and Altman are used to measure financial distress. The research hypotheses are tested using panel data and fixed effects by multivariate regression statistical method. The results show that CSR performance alone does not affect financial distress. The combination of CSR and life cycle in the growth and maturity phases has a significant and negative effect on financial distress. The CSR performance and life cycle together reduce financial distress. The combination of CSR performance and life cycle in the recession phase has a positive and significant effect on financial distress and in the fall phase, does not affect it. Given that companies compete more in the phase of growth and maturity than other phases of the life cycle, they also pay more attention to CSR. Therefore, according to these results, it can be concluded that the life cycle of the company and the CSR performance together, reduce financial distress.