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Scope, measurement, impact size and determinants of indirect cost of financial distress

Author

Listed:
  • Umar Farooq
  • Ali Qamar Jibran

Abstract

Purpose - The purpose of the study is to systematically review the literature of indirect cost of financial distress to understand its scope, measurements, impact size and determinants to synthesis with future research agenda. Design/methodology/approach - Five-step process of systematic literature review (SLR) as applied byOpokuet al.(2015) is used. SLR extracted 47 studies of indirect cost after applying specified search criteria. Data regarding measurement, impact size and determinants are presented and summarised in specified tables. Findings - SLR showed that the study of indirect cost in developing countries is a literature gap. It is also found that opportunity loss, operating profit loss, market loss and risk premium are most studied indirect costs using legal definition orex anteproxy of financial distress. However, future studies are recommended to use both non-linear leverage andex anteproxy of financial distress. Future studies are also suggested to use the moderation technique while studying the determinants of indirect cost. Research limitations/implications - Literature selection is based on specific search criteria that can miss some of the other related literature. Originality/value - The indirect cost of financial distress is more costly and difficult to measure due to its complex concealed effects. A detailed literature of indirect cost is needed to understand the construct that eventually will help to define the future research agenda. To the best of the authors’ knowledge, no SLR of indirect cost is provided yet. Therefore, the outcome of this research will be valuable for both academicians and practitioners.

Suggested Citation

  • Umar Farooq & Ali Qamar Jibran, 2018. "Scope, measurement, impact size and determinants of indirect cost of financial distress," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 10(1), pages 111-129, February.
    • Handle: RePEc:eme:qrfmpp:qrfm-08-2017-0080
    DOI: 10.1108/QRFM-08-2017-0080
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    Citations

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    Cited by:

    1. Zack Jourdan & J. Ken. Corley & Randall Valentine & Arthur M. Tran, 2023. "Fintech: A content analysis of the finance and information systems literature," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-21, December.
    2. Alessandro Gennaro, 2021. "Insolvency Risk and Value Maximization: A Convergence between Financial Management and Risk Management," Risks, MDPI, vol. 9(6), pages 1-36, June.

    More about this item

    Keywords

    Systematic review; Financial distress; Indirect cost; G32; G33;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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