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Bankruptcy Prediction And Its Effect On Stock Prices As Impact Of The COVID-19 Pandemic

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  • Muhammad Ramadhani Kesuma

    (Master of Management, Faculty of Economics and Business, Mulawarman University, Indonesia)

  • Felisitas Defung

    (Master of Management, Faculty of Economics and Business, Mulawarman University, Indonesia)

  • Anisa Kusumawardani

    (Master of Management, Faculty of Economics and Business, Mulawarman University, Indonesia)

Abstract

As COVID-19 pandemic hit the world since early 2020, one business sector in many countries that struggling to survive is tourism and its derivatives, such as restaurants and hotels.  This study aims to examine the accuracy of the Springate and Grover models in predicting bankruptcy, as well as the effect on stock prices of tourism, restaurant, and hotel sector in Indonesia. The results show that all sample tourism, restaurant, and hotel companies are bankrupt under the Springate model, whilst according to Grover's model the findings are varied during the study period. Furthermore, the Grover model is implied to be more accurate than the Springate model. The effect of both prediction models on stock price appears dissimilar. Springate's prediction model suggests a positive and significant effect on stock prices, whereas there is no strong evidence about the effect of Grover's prediction model.

Suggested Citation

  • Muhammad Ramadhani Kesuma & Felisitas Defung & Anisa Kusumawardani, 2021. "Bankruptcy Prediction And Its Effect On Stock Prices As Impact Of The COVID-19 Pandemic," Technium Social Sciences Journal, Technium Science, vol. 25(1), pages 567-582, November.
    • Handle: RePEc:tec:journl:v:25:y:2021:i:1:p:567-582
    DOI: 10.47577/tssj.v25i1.4964
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    References listed on IDEAS

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    1. Błażej Prusak, 2018. "Review of Research into Enterprise Bankruptcy Prediction in Selected Central and Eastern European Countries," IJFS, MDPI, vol. 6(3), pages 1-28, June.
    2. M. Noor Salim & Sudiono, 2017. "An Analysis Of Bankruptcy Likelihood On Coal Mining Listed Firms In The Indonesian Stock Exchange: An Altman, Springate And Zmijewski Approaches," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(3), pages 99-108.
    3. Daniel Ogachi & Richard Ndege & Peter Gaturu & Zeman Zoltan, 2020. "Corporate Bankruptcy Prediction Model, a Special Focus on Listed Companies in Kenya," JRFM, MDPI, vol. 13(3), pages 1-14, March.
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    Cited by:

    1. Tijana Matejić & Snežana Knežević & Vesna Bogojević Arsić & Tijana Obradović & Stefan Milojević & Miljan Adamović & Aleksandra Mitrović & Marko Milašinović & Dragoljub Simonović & Goran Milošević & Ma, 2022. "Assessing the Impact of the COVID-19 Crisis on Hotel Industry Bankruptcy Risk through Novel Forecasting Models," Sustainability, MDPI, vol. 14(8), pages 1-44, April.
    2. Marko Špiler & Tijana Matejić & Snežana Knežević & Marko Milašinović & Aleksandra Mitrović & Vesna Bogojević Arsić & Tijana Obradović & Dragoljub Simonović & Vukašin Despotović & Stefan Milojević & Mi, 2022. "Assessment of the Bankruptcy Risk in the Hotel Industry as a Condition of the COVID-19 Crisis Using Time-Delay Neural Networks," Sustainability, MDPI, vol. 15(1), pages 1-54, December.

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    More about this item

    Keywords

    Bankruptcy Prediction; Springate; Grover; Stock Price; COVID-19;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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