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Article
Author(s)
Francesco Paolone, Adalberto Rangone
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DOI:10.17265/1537-1506/2015.10.003
Affiliation(s)
Francesco Paolone, research fellow in business and economics, Department of Business and Law, University of Naples “Parthenope”, Naples, Italy.
Adalberto Rangone, research fellow in business and economics, Department of Business and Economics, University of Pavia, Pavia, Italy.
ABSTRACT
The global economic crisis that blew up at the end of 2006 in the United States has had extremely negative impacts on the social, political, and economic fields. The countries operating in the most affected macro areas—the United States and Europe—have put through the wringer the domestic trade relationships as well as the international ones, by injecting a chain reaction into the global economic scenario. However, there are countries that seem to be free from the economic and financial contagion overflowing over the past years, as they are moved by an “invincible projection toward the growth”. The present study aims to analyze how much the main emerging market of China has been effectively involved in this vicious circle. More specifically, the study intends to propose an empirical analysis on the real connection between the macroeconomic data and the strong structure of the Chinese publicly listed companies. This paper investigates the prediction of failure among 3,220 Chinese publicly traded companies (listed companies) during the global crisis period. By analysing the financial accounting data over the past seven years (2008 to 2014), the emerging market score (EMS) has been adopted in order to investigate the impact of the crisis on financial distress in the main emerging market of China. The results confirm the following hypotheses: On one hand, the great majority of companies have not been suffering the downturn, since 71.93% of the entire samples present no risk of financial distress during the global crisis; on the other hand, only 6.18% have a reasonable risk of financial distress.
KEYWORDS
emerging market score (EMS), Altman’s model, performance measurement, financial distress, global economic crisis
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