Are Profit Warnings and Suspension Notices Adequate Disclosures of distress

Type of content
Journal Article
Publisher's DOI/URI
Thesis discipline
Degree name
Publisher
University of Canterbury. Department of Economics and Finance
Journal Title
Journal ISSN
Volume Title
Language
Date
2011
Authors
Anderson, W.W.
Chang, A.
Abstract

The paper uses simple event study methodology to look at whether disclosures of financial distress in terms of profit warning announcements and suspension notices impact on the market price of the shares of publicly listed New Zealand firms and examines the correlation between the behaviour of share prices and the firm’s corresponding Z score, which is indicative of the severity of financial distress. Using a sample of 71 distressed and matching control firms, the results are generally in support of prior literature but also highlight the complexity of the nature of financial distress prediction. The results also question the efficacy of the required disclosures on the NZX as timely or accurate identifiers of distress.

Description
Accepted for publication June 2011, published in September 
Citation
Anderson, W.W., Chang, A. (2011) Are Profit Warnings and Suspension Notices Adequate Disclosures of distress. International Research Journal of Finance and Economics, (73), pp. 27-45.
Keywords
finance, event study, financial distress, abnormal returns, Altman’s Z
Ngā upoko tukutuku/Māori subject headings
ANZSRC fields of research
Fields of Research::38 - Economics::3801 - Applied economics::380107 - Financial economics
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