Financial Health and Corporate Performance of Listed Manufacturing Companies in South Korea and Taiwan: A Comparative Study of the Two Asian Tigers

• Main Authors: FOO, See Liang, PATHAK, Shaakalya
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Financial Health; Corporate Performance; Manufacturing; Altman Z-Score; Return on Equity; Accounting; Asian Studies; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/1521; https://ink.library.smu.edu.sg/context/soa_research/article/2548/viewcontent/7253683.pdf
• Institution: Singapore Management University

South Korea and Taiwan are two leading economies in Asia Pacific. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analyzed. The analysis covers the period from 2000 to 2013(inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both markets. South Korea and Taiwan both registered moderate-to-strong mean and median Z-Scores. However, Taiwan is comparatively healthier. These findings further support the economic stature of these two markets as Asian tigers.