Financial Distress Factors That Affect the Company Performances in Malaysia’s Public Listed Manufacturing Firms

Nurul Izza, Abd Malek and Julian Denardio, Densi (2023) Financial Distress Factors That Affect the Company Performances in Malaysia’s Public Listed Manufacturing Firms. In: BORNEO BUSINESS RESEARCH CONFERENCE (BRRC 2023), 23 August 2023, Raia Hotel Convention Centre, Kuching.

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Abstract

This study explores the impact of financial ratios and macroeconomic factors on financial distress among listed manufacturing companies in Malaysia. It analyses data from 18 randomly selected manufacturing firms over a 20-year period (2001-2021) and investigates the relationship between profitability, leverage, liquidity, and the level of financial distress. Additionally, it examines the influence of macroeconomic variables such as gross domestic products (GDP), consumer price index (CPI), real interest rate (RIR), producer price index (PPI), and money supply (M2) on financially troubled companies. Based on the findings of the study, it shows that profitability and liquidity ratios have a significant impact on financial distress. This implies that if a firm has low profitability and liquidity ratios, they are more likely to experience financial difficulties. As a result, maintaining a healthy level of profitability and liquidity can be critical to a company's financial stability and its ability to meet its obligations. Additionally, it suggests that among the macroeconomic factors firm's financial distress. The result from the findings concludes that changes in the money supply of a country’s economy are influenced by monetary policy decisions, which can affect the financial position of firms.

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