Understanding the connection of performance and Z-scores for manufacturing firms in South Korea

Author

S.L. FOO, Singapore Management UniversityFollow
SHAAKALYA PATHAK, Singapore Management UniversityFollow

Publication Type

Journal Article

Version

publishedVersion

Publication Date

10-2019

Abstract

South Korea is a key leading economy in the Asia Pacific region. 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 this market. A linear regression has been conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a five-year period have also been analysed. The analysis covers the period from 2013 to 2017 (inclusive) and yields a statistically positive correlation between ROE and the Z-Score for the market. South Korea registered moderate mean and median Z-Scores. These findings further support the strong economic position of this market as an Asian giant.

Keywords

Financial health, corporate performance, manufacturing, Altman Z-Score, return on equity

Discipline

Accounting | Asian Studies | Corporate Finance

Research Areas

Accounting Information System

Publication

Journal of Asian Development

Volume

5

Issue

3

First Page

37

Last Page

46

ISSN

2377-9594

Identifier

10.5296/jad.v5i3.15555

Publisher

Macrothink Institute

Citation

FOO, S.L. and SHAAKALYA PATHAK. Understanding the connection of performance and Z-scores for manufacturing firms in South Korea. (2019). Journal of Asian Development. 5, (3), 37-46.
Available at: https://ink.library.smu.edu.sg/soa_research/1824

Copyright Owner and License

Publisher

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Additional URL

https://doi.org/10.5296/jad.v5i3.15555