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Financial Health & Corporate Performance-a Comparison of Manufacturing Companies in China & India

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  • Foo See Liang
  • Shaakalya Pathak

Abstract

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.

Suggested Citation

  • Foo See Liang & Shaakalya Pathak, 2016. "Financial Health & Corporate Performance-a Comparison of Manufacturing Companies in China & India," Journal of Asian Development, Macrothink Institute, vol. 2(1), pages 18-29, April.
    • Handle: RePEc:mth:jad888:v:2:y:2016:i:1:p:18-29
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    References listed on IDEAS

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    Cited by:

    1. Surbhi Bhatia & Manish K. Singh, 2022. "Fifty years since Altman (1968): Performance of financial distress prediction models," Working Papers 12, xKDR.

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