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Financial Health & Corporate Performance: A Comparison of Manufacturing Companies in China

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  • Foo See Liang
  • Shaakalya Pathak

Abstract

The People¡¯s Republic of China (China) 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. China registered moderate-to-strong mean and median Z-Scores. These findings further support the strong economic position of this market as an Asian giant.

Suggested Citation

  • Foo See Liang & Shaakalya Pathak, 2018. "Financial Health & Corporate Performance: A Comparison of Manufacturing Companies in China," Journal of Asian Development, Macrothink Institute, vol. 4(2), pages 123-132, November.
    • Handle: RePEc:mth:jad888:v:4:y:2018:i:2:p:123-132
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