Volume 3, Number 2 / June , Pages 71-145
An Investigation of Thai Listed Firms' Financial Distress Using Macro and Micro Variables
Multinational Finance Journal, 1999, vol. 3, no. 2, pp. 103-125
Sunti Tirapat , Chulalongkorn University, Thailand    Corresponding Author
Aekkachai Nittayagasetwat , National Institute of Development Administration, Thailand

The emergence of the economic crisis in Thailand in 1997 is an interesting case for academic studies. Internationally, it had a contagion effect, spreading to countries in Asia and in other regions. Domestically, it caused a great many industrial and corporate bankruptcies. The Thai economy had been relatively stable since 1984. The recent development in 1997, however, produced a sudden economic slump resulting in closures of many Thai corporations. Using a logit regression, this study develops a macro-related micro-crisis investigation model. The significance of the model is in its ability to bridge a firm's sensitivity to macroeconomic conditions and its financial characteristics in order to explore a firm's financial distress. The findings indicate that macroeconomic conditions are critical indicators of potential financial crisis for a firm. The article shows that the higher a firm's sensitivity to inflation, the higher the firm's exposure to financial distress.

Keywords : bankruptcy; financial distress; prediction model; and Thailand crisis
View in Bib TeX Format      View Cite Format 1      View Cite Format 2