Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/304005 
Year of Publication: 
2023
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 11 [Issue:] 1 [Article No.:] 2186038 [Year:] 2023 [Pages:] 1-22
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
This study analyses the cost of financial distress of non-financial firms listed on the Pakistan stock exchange. Furthermore, it considers the moderating role of concentrated ownership in the relationship between debt and expected financial distress costs. We used the panel data of 214 firms from 2010 to 2018 to analyse the results. We apply fixed effect model to test the hypotheses. We find that ex-ante financial distress costs are based not only on the probability of financial distress but also affect the amount of time and money spent during the distress period. The use of tangible fixed assets and long-term leverage lowers the cost of financial distress, whereas the use of short-term debt has no significant impact on the cost of financial distress. Furthermore, the company's ownership structure dampens the impact of these factors. Corporate management may reduce the cost of financial distress through better management of fixed assets and financial leverage.
Subjects: 
collateral
financial distress cost
financial distress likelihood
interest coverage ratio
JEL: 
G32
M41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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