Relationships between financial statement information and firm characteristics : a study of the Thai manufacturing corporate sector | |
| Author | Saha, Gour Chandra |
| Call Number | AIT Diss. no.SM-06-01 |
| Subject(s) | Business enterprises--Thailand--Finance Ratio analysis Industrial management--Thailand |
| Note | A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy |
| Publisher | Asian Institute of Technology |
| Abstract | This study examines some commonly hypothesized relationships between financial statement information and firm size, growth. Industry and ownership concentration in the context of the Thai manufacturing corporate sector. These relationships are examined for the period of 10 years divided into three sub-periods, namely, prior to, during, and after the 1997 economic crisis. The sample included all 213 surviving manufacturing firms listed at Stock Exchange of Thailand. The relationships have been examined between financial statement information and firm characteristics at aggregate level (i.e. combining all the sample firms). Financial ratios and decomposition measures are used in this study to represent financial statement information. It is found that a V-shaped recovery has set in after crisis in Thai economy. In operational terms, the economy has a positive move after the crisis. The findings reinforce the macro-economic indicators such as GDP, inflation rate, foreign reserve, capital account balance, and exchange rate. Except for the firm size at pre- and during crisis, there are consistencies in the relationships of financial ratios and decomposition measures with firm growth, industry, and ownership concentration at all periods. It is found that liquidity, activity, and profitability ratios during-crisis are lower and leverage ratios and average decomposition measures are higher during crisis than the pre- and post-crisis periods. It is because there was more deterioration of the firms' financial conditions during the period. High growth firms had relatively more deteriorating performance during and after the crisis as reflected by low liquidity, high leverage and large decomposition measures. It is because pre-crisis growth had weak fundamentals and resulted in higher volatility of profitability during and after the crisis. Higher leverage and larger average decomposition measures are seen in the durable goods industries in all three sub-periods because the firms in those industries had more long-terns borrowings and high volatility in demand. Devaluation o-f Baht during crisis further increased the valuation of dollar borrowings in local currency for this industry. Leverage and average decomposition measures are significantly higher and liquidity is lower for the firms with high ownership concentration in all three sub-periods, with more pronounced effect during crisis. These firms had substantial amount of bank loans and unproductive assets pre-crisis. Falling customers' demand and stricter credit policy of the banks during crisis caused reduction in leverage and mismatch in cash flow. After crisis, the shareholders had lack of confidence causing shareholders' withdrawal of equity in the form of cash and other current assets. Small firms are seen to have large average decomposition measures prior to and after the crisis. It indicates that small firms were less successful to anticipate and cope with the financial crisis. However, the measure is not significantly different between small and large firms during the crisis as expected. The unequal decomposition measures indicate that firms of all sizes were affected equally during the crisis. Contrary to decomposition measure based findings, financial ratios pre-crisis does not show any significant differences between small and large firms. During crisis, small firms had higher liquidity and lower leverage ratios than large firms, indicating the two types of firms did not have equal performance. After the crisis, the two measures showed consistent relationship with more liquidity, lower leverage ratio and larger decomposition measures in smaller firms |
| Year | 2006 |
| Type | Dissertation |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Paul, Himangshu |
| Examination Committee(s) | Venkatesh, Sundar;Ramachandran N.;Voratas Kachitvichyanukul; |
| Scholarship Donor(s) | Assumption University of Thailand; |
| Degree | Thesis (Ph.D.) - Asian Institute of Technology, 2006 |