Explaining the Financial Factors Affecting Turnaround from the insolvency of Companies Listed on the Tehran’s Stock Exchange

Subject Areas : Labor and Demographic Economics

kazem harounkolai ¹ ( PhD Student in Accounting, Department of Accounting, Babol Branch, Islamic Azad University, Mazandaran, Iran )
Seyedali Nabavi chashmi ² ( Associate Professor, Department of Accounting, Babol Branch, Islamic Azad University, Mazandaran, Iran )
ghodratolah barzegar ³ ( Assistant Professor, Department of Accounting, Faculty of Economics and Administrative Sciences, University of Mazandaran, Mazandaran, Iran )
iman dadashi ⁴ ( Assistant Professor of Accounting, Babol Branch, Islamic Azad University, Mazandaran, Iran )

Received: 2020-05-04 Accepted : 2020-08-06 Published : 2020-08-22

Keywords: D53, financial turnaround, financial variables, JEL Classification: G17, G11. Keywords: Financial Insolvency, Tehran’s Stock Exchange,

Abstract :

The aim of this paper is explaining the financial factors affecting turnaround from the insolvency. For explaining financial affecting turnaround from insolvency 54 variables were selected from relevant studies. The information of 200 cases of distressed companies which were under recovery from distress was extracted between 2001 and 2017. Appropriate statistical methods for the process of refining variables have been performed through paired mean comparison tests as well as exploratory factor analysis using main components. Then, by filtering the variables using audit analysis and in the form of linear combinations, audit functions were formed. The results showed that the financial ratios of current liabilities to total assets, net profits to sales and sales to current assets have the most power to explain the companies’ turnaround.

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