Prioritization of factors affecting the exit from the bankruptcy of companies listed in the Tehran Stock Exchange

Sahraei, Fatemeh; Jamali, Jafar; Vakilifard, Hamid Reza; Zare, Ali; Zeraatkish, Seyed Yaghoub

doi:10.22075/ijnaa.2023.30316.4381

Prioritization of factors affecting the exit from the bankruptcy of companies listed in the Tehran Stock Exchange

Document Type : Research Paper

Authors

Fatemeh Sahraei ¹

Jafar Jamali ¹

Hamid Reza Vakilifard ²

Ali Zare ³

Seyed Yaghoub Zeraatkish ⁴

¹ Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran

² Department of Accounting, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran

³ Department of Law, Faculty of Theology and Political Sciences, Sciences and Research Branch, Islamic Azad University, Tehran, Iran

⁴ Department of Agricultural Economic, Faculty of Agricultural Sciences and Food Engineering, Sciences and Research Branch, Islamic Azad University, Tehran, Iran

10.22075/ijnaa.2023.30316.4381

Abstract

Companies should evaluate the nature of the crisis after a detailed pathology of the factors causing the problem and look for appropriate solutions to get out of this crisis. This study was conducted on 144 companies from 2010-2021 to prioritize the factors affecting the exit from bankruptcy and financial revival of the companies using the analysis of multiplayer artificial neural networks. First, financial ratios obtained from the literature review and expert evaluation were independentist of each other through principal component analysis. Then, the main components affecting exit from bankruptcy under logistic regression models were identified, and finally, the final logistic model for exit from bankruptcy was presented. Based on the results, the essential financial variable in exiting bankruptcy is the change in capital increase policies from the place of stock issuance. The least critical variable is the change in dividend policies.

Keywords

bankruptcy

exit from bankruptcy

financial revival

artificial neural network

[1] I. Ghazzawi, Organizational turnaround: A conceptual framework and research agenda, Amer. J. Manag. 17 (2018), no. 7, 10–24.

[2] V.Y. Lee, Corporate asset restructuring through mergers and acquisitions and divestitures, Ph.D. Thesis, University of Reading, 2021.

[3] H. Rahman Saresht, Y. Hasas Yeganeh, M. Fallah Shams and M. Irandoust, A strategic model of in-crisis firms’ turnaround process, J. Buss. Manag. 6 (2014), no. 3, 497–516.

[4] D. Ramalho, Financial distress and corporate turnaround strategies: an empirical analysis of 11 US industries, Master Dissertations, Repositorio Institucional da Universidade Catolica Portuguesa, 2021.

[5] X. Zhang, R. Ouyang, D. Liu and L. Xu, Determinants of corporate default risk in China: The role of financial constraints, Econ. Model. 92 (2020), 87–98.