Explore publications.

This study aims to examine and analyze the effect of financial distress with the Altman and Springate Models on stock returns either directly or indirectly by involving earnings management as a mediation. This study uses secondary data from Textile and Garment Companies listed on the Indonesia Stock Exchange from 2015-2019, with a sample of 20 companies using sampling so that 100 observations are obtained. The data is obtained from the annual financial statements. The data analysis technique used SEM-PLS with the help of WarpPLS 6.0 software. The results of the study provide empirical evidence that financial distress has a positive effect on earnings management, while financial distress and earnings management has a negative effect on stock returns. Earnings management is able to mediate the effect of financial distress on stock returns.

Related party transactions are a key factor to the sustainability of Savings and Credit Cooperatives (SACCOs). In view of this fact, loans to directors and staff are viewed as a factor which can greatly influence savings and credit cooperatives into either falling into financial distress or helping them to remain a float and become financially stable entities. The stakeholder theory holds that entities should be managed a manner that will satisfy every stakeholder. The stewardship theory reiterates that managers have the organisation at heart and can it to profitability as if it were their own. However approval of loans and other transactions to managers and staff, may not positively impact the entity. This study was designed to establish the effect of related party transactions on the relationship between board characteristics and financial distress of deposit taking SACCOs in Nairobi County. We applied Descriptive research design on Deposit taking SACCOs in Nairobi County which was identified purposively while a census was conceded for all deposit taking SACCOs in the county. We obtained secondary data from SASRA using a data collection sheet after which we performed panel data analysis by use of STATA software. Findings were presented using tables. The study concluded that related party transactions influenced the relationship between board characteristics and financial distress of Deposit Taking SACCOs in Nairobi County. Related party transactions can be an avenue of causing financial distress and should be kept as low as possible. The regulator should come up with a tool based on Altman’s Z score models to predict financial distress in SACCOs in order to offer timely advice to alleviate more distress and consequent bankruptcy which may lead to closure of SACCOs. Another research may be carried out to establish other factors causing financial distress and how to turn around the SACCOs already in distress.

The widespread failure of DT SACCOs in Kenya is likely to lead to a loss of confidence among the current and potential members of the DT SACCOs in Kenya and eventually threatens to kill the sector. The study examined the effect of related party transactions on financial distress in DT-SACCOs in Kenya; the study adopted the following theories as to the basis of analyzing the collected data; wrecker’s financial distress theories and Agency theory. The target population was 176 Deposit-Taking SACCOs. Secondary data was obtained from SACCOs records as published by SASRA. The study used a systematic sampling technique based on the sampling formula by Taro Yamane (1967) to obtain the appropriate sample size of 68 DT SACCOs. Data were analyzed using STATA computer software. Data collection covered seven (7) year period from 2008 -2014, this period of 7 years was selected for the study because SASRA has enacted in 2010 therefore the justification for the choice of the study period, that is 3 years before and 4 years after SASRA enactment. The study established that related party transactions had a significant effect on financial distress in DT SACCOs in Kenya. The implications of the findings are that if the DT-SACCOs do not manage related party transactions then they will continue experiencing financial distress. The government through SASRA therefore should enact strict regulations in directors borrowing from SACCOs. The study has expounded on the body of knowledge on measures of financial distress in finance by introducing new relationships established. In terms of the contribution of the current study to innovation, the study used panel data analysis while other studies used OLS.