A Study of Association between Accounting Manipulations and Bankruptcy Likelihood : Analysis of 18 public companies from the United Kingdom
Shevtsov, Yaroslav; Mariia, Gusarova (2017)
Jyväskylän ammattikorkeakoulu
2017
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201801111219
https://urn.fi/URN:NBN:fi:amk-201801111219
Tiivistelmä
The primary objective of this research is to define whether there is any dependence of the probability of bankruptcy on the accounting manipulations. The researchers also tried to identify where the risk of the bankruptcy is coming from – from the market or a firm’s internal problems. In addition to that, the research aims to check whether the companies who poorly perform on the stock market are more likely to be manipulators.
The 18 companies from the United Kingdom have been analysed based on relationships between the Altman Z-score model, Beneish M-score model, beta and the standard deviation of the stock prices. The studied period is from 2010 to 2015.
The results show that the probability of bankruptcy does not depend on the accounting manipulations. The risk that causes the bankruptcy probability is coming from the company’s management rather than from the market. Whereas according to the findings, the more is the internal risks, the more is the extent of the accounting manipulations.
Researchers have also found, that the high-performing companies are less tend to manipulate than the well-performers and low-performers. No evidence found that the low-performing companies are more manipulative than well-performers. Finally, the findings suggest, that the retail industry is the most robust one regarding the likelihood of bankruptcy.
The 18 companies from the United Kingdom have been analysed based on relationships between the Altman Z-score model, Beneish M-score model, beta and the standard deviation of the stock prices. The studied period is from 2010 to 2015.
The results show that the probability of bankruptcy does not depend on the accounting manipulations. The risk that causes the bankruptcy probability is coming from the company’s management rather than from the market. Whereas according to the findings, the more is the internal risks, the more is the extent of the accounting manipulations.
Researchers have also found, that the high-performing companies are less tend to manipulate than the well-performers and low-performers. No evidence found that the low-performing companies are more manipulative than well-performers. Finally, the findings suggest, that the retail industry is the most robust one regarding the likelihood of bankruptcy.