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The Relationship between Ownership Structure and the Probability of a Financial Distress Warning Happening: Evidence of Listed Common Stock Companies in Taiwan

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Listed:
  • Ching-Chun Wei
  • Wen-Xin Fang
  • Guan-Hua Li
  • Yu-Wen Kao
  • Miao-Lin Tsai
  • Ching-Yi Yang

Abstract

This paper discusses about the ownership structure of firms and the probability of a financial distress warning happening in Taiwan. Our sample covers all listed common stock companiesexceptthe financial industry from 2006 to 2014. This study usesthe Z-score to measure the probability of firms¡¯ financial distress warning happening and employs the shareholding ratio of managerial share ownership, the shareholding ratio of financial institutional investors, and the size of the board of directors to measure firms¡¯ ownership structure. For our results, the shareholding ratio of managerial share ownership has positive relationship with the probability of a financial distress warning happening, while the shareholding ratio of institutional investors and the size of the board of directors have a negative relationship with the probability of the same warning happening.

Suggested Citation

  • Ching-Chun Wei & Wen-Xin Fang & Guan-Hua Li & Yu-Wen Kao & Miao-Lin Tsai & Ching-Yi Yang, 2017. "The Relationship between Ownership Structure and the Probability of a Financial Distress Warning Happening: Evidence of Listed Common Stock Companies in Taiwan," Applied Economics and Finance, Redfame publishing, vol. 4(1), pages 34-42, January.
    • Handle: RePEc:rfa:aefjnl:v:4:y:2017:i:1:p:34-42
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    References listed on IDEAS

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    1. Yufei Cao & Abdulmajeed Mawhan H. Alfadhli & Mohammad Jaradat & Ramona Lile & Mihaela Gadoiu & Mariana Banuta & Daniela Mihai & Malik Shahzad Shabbir, 2024. "The impact of accounting practices on financial sustainability: A study of external block-holders and institutional ownership," Review of Managerial Science, Springer, vol. 18(7), pages 1945-1961, July.

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    More about this item

    Keywords

    ownership structure; financial distress warming; shareholding ratio of investors; board ofdirectors;
    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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