Studying bankruptcy risk, productivity and firm strategy in companies listed in Tehran stock exchange
Journal Title: International Research Journal of Applied and Basic Sciences - Year 2015, Vol 9, Issue 5
Abstract
The purpose of this research is to examine the relationship between productivity, firm strategy and bankruptcy risk in companies listed in Tehran stock exchange. In case of bankruptcy all groups that are somehow related to the company will be affected. The current research tries to survey the factors reducing the bankruptcy risk. In the current research two factors: company productivity and company strategy are surveyed. The criterion for selecting bankrupt companies in this research is Altman model and eventually the information of 50 bankrupt companies listed in Tehran Stock Exchange during 8 years (2006- 2013) are gathered. Data envelopment analysis (DEA) is used for measuring productivity and two Porter's generic strategies, cost leadership strategy and differentiation strategyare used for measuring company strategy. Findings achieved from testing hypotheses which are panel data show that there is a negative and significant correlation between productivity and bankruptcy risk. Also the correlation between cost leadership strategy, differentiation strategy and bankruptcy risk is negative and significant. Thus it is concluded that one of the mechanisms through which the company strategy affects bankruptcy risk is productivity. Research results showed that higher levels of productivity result in lower levels of bankruptcy risk; and also higher levels of each of the two strategies of cost leadership and differentiation result in reducing the bankruptcy risk. Mediation analysis results confirm that productivity acts as an intermediate channel and delivers the effect of cost leadership strategy to bankruptcy risk.
Authors and Affiliations
Leila Rahmani Movahed *| Department of Accounting, Hamedan Branch, Islamic Azad University, Hamedan, Iran, email: leila.movahed17@yahoo.com, Bagher Shamszadeh| Department of Accounting, Bu Ali Sina Hamedan University, Hamedan, Iran
Keywords
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