The People’s Republic of China (China) and India are two leading economies in Asia Pacific. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analysed. The analysis covers the period from 2000 to 2013 (inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both markets. China and India both registered moderate-to-strong mean and median Z-Scores. However, China is comparatively healthier. These findings further support the economic stature of these two markets as Asian giants.
Financial Health, Corporate Performance, Manufacturing, Altman Z-Score, Return on Equity, China, India
Accounting | Asian Studies | Corporate Finance
Corporate Governance, Auditing and Risk Management
Journal of Asian Development
FOO S.L. and SHAAKALYA PATHAK.
Financial health and corporate performance: A comparison of manufacturing companies in China and India. (2016). Journal of Asian Development. 2, (1), 18-29. Research Collection School Of Accountancy.
Available at: http://ink.library.smu.edu.sg/soa_research/1534
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.