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Firm's size and solvency performance: evidence from the Malaysian public listed firms

Ramin, Ahmad Kaseri and Mohd Diah, Mohd Lizam and Mohd Zabri, Shafee and Ahmad, Mohd Fauzi (2017) Firm's size and solvency performance: evidence from the Malaysian public listed firms. Journal of Engineering and Applied Sciences, 12 (5). pp. 1240-1244. ISSN 1816949X

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Abstract

Firm solvency is one of the important indicators in measuring firm’s performance. Firm ability to grow and sustaining their business in the highly competitive business environment depends significantly on its cash flow management capacity that subsequently results to a business stay solvent at every phase of business life cycle. Early detection of financial distress is important for every firm of various sizes. Previous findings on firm’s size and solvency performance varies which tendency on agreeing to the assumption that larger firms have the advantages to avoid insolvency as compare to smaller firms. However, previous studies have also revealed that larger firms such as public listed company were not escape from facing financial distress which eventually lead to insolvency. Therefore, the study was aimed to indentify the influence of firm’s size and solvency performance of public listed firms in Malaysia. A total of 149 firms were used to measure their financial data performance for a period between 2011 and 2014. Firm total assets and paid capital were used as a proxy to firm size. The current ratio and debt ratio were used as a proxy to measure the solvency performance. The study found that firm size measured by total assets has moderately influence the solvency performance of firms indicated by the debt ratio and current ratio. However the firm size measured by paid-up capital has lesser influence on solvency performance measured by debt ratio and no influence on current ratio.

Item Type: Article
Uncontrolled Keywords: Current ratio; debt ratio; firm size; insolvency; liquidity; solvency
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Faculty of Technology Management and Business > Department of Technology Management
Depositing User: Mr. Mohammad Shaifulrip Ithnin
Date Deposited: 30 Apr 2019 01:05
Last Modified: 30 Apr 2019 01:05
URI: http://eprints.uthm.edu.my/id/eprint/10959
Statistic Details: View Download Statistic

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