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The Value Relevance of Financial Distress Risk in the Case of RASDAQ Companies

Author

Listed:
  • Ioan-Bogdan Robu

    (Alexandru Ioan Cuza University of Iasi, Romania)

  • Mihaela-Alina Robu

    (Alexandru Ioan Cuza University of Iasi, Romania)

  • Marilena Mironiuc

    (Alexandru Ioan Cuza University of Iasi, Romania)

  • Florentina Olivia Balu

    () (University of Geneva, Switzerland)

Abstract

The financial distress risk concept has been referred as follow: negative net assets, insolvency, bond default, overdraft, unpaid dividends for the preferred stocks, bankruptcy etc. From all the stakeholders, investors are interested in the financial position and performance of a company and its ability to continue as a going concern, without knowing the appearance of financial distress status. The purpose of this study aims to test the value relevance of the appearance of distress risk on investors’ decisions on the purchase or sale of stock, with impact on stock return, for the Romanian listed companies in RASDAQ section. In order to reach the objective, the study was carried on upon a sample of 70 Bucharest Stock Exchange (BSE) listed companies, between 2008 and 2014, using statistical methods like analysis of variance (ANOVA), simple linear regression and ANCOVA models. Through the obtained results, it was demonstrated the difference between financial distressed companies and performant companies and the influence of belonging to a company in the high risk category on the stock return.

Suggested Citation

  • Ioan-Bogdan Robu & Mihaela-Alina Robu & Marilena Mironiuc & Florentina Olivia Balu, 2014. "The Value Relevance of Financial Distress Risk in the Case of RASDAQ Companies," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 13(4), pages 623-642, December.
  • Handle: RePEc:ami:journl:v:13:y:2014:i:4:p:623-642
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    Cited by:

    1. Błażej Prusak, 2018. "Review of Research into Enterprise Bankruptcy Prediction in Selected Central and Eastern European Countries," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 6(3), pages 1-1, June.
    2. Volker Stein & Arnd Wiedemann, 2016. "Risk governance: conceptualization, tasks, and research agenda," Journal of Business Economics, Springer, vol. 86(8), pages 813-836, November.

    More about this item

    Keywords

    value relevance; distress risk; financial ratios; ANOVA; ANCOVA; RASDAQ;

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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