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The Role of Fundamental Accounting Variables in Determining Systematic Risk: Financially Distressed and Healthy Corporates

    Authors

    • Gholamreza Kordestani 1
    • Ramin Eskandari 2
    • Mohammadreza Asoodeh 2

    1 Prof., Accounting Department, Faculty of Social Sciences Sciences, Imam Khomeini International University, Qazvin, Iran

    2 MSc. Student Faculty of Social Sciences Sciences, Imam Khomeini International University, Qazvin, Iran

,

Document Type : Research Paper

10.30479/jfak.2023.18856.3098
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Abstract

Objective: The aim of this paper is to investigate the role of the fundamental accounting variables in determining the systematic risk by focusing on two samples of healthy and financially distressed firms.
Methods: The method is pairwise comparison. For this purpose, the data of 17975 monthly observations of healthy firms and 6430 monthly observations of distressed firms (309firm) were analyzed.
Findings: The results indicated that there is a significant difference between the status of fundamental variables in healthy and distressed stocks. Also, systematic risk in distressed firms is higher than in healthy firms (at 90% confidence level). And finally, the results showed that the expected returns and risk premium in healthy firms is higher than distressed firms.
Conclusion: The results indicated that there is a relationship between the fundamental accounting variables and systematic risk in two samples of financially distressed and healthy firms, and this relationship causes the difference in expected return and premium risk of financially distressed and healthy firms.
Contribution: Identifying the fundamental accounting variables and explaining their relationship with systematic risk by separating financially distressed and healthy firms leads to a more accurate premium risk assessment.
 

Keywords

  • Expected Return
  • Financial Distress
  • Fundamental Accounting Variables
  • Systematic Risk

Main Subjects

  • Financial Accounting
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Financial Accounting Knowledge
Volume 11, Issue 2 - Serial Number 41
July 2024
Pages 1-28
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How to cite
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  • Article View: 756
  • PDF Download: 652

APA

Kordestani, G. , Eskandari, R. and Asoodeh, M. (2024). The Role of Fundamental Accounting Variables in Determining Systematic Risk: Financially Distressed and Healthy Corporates. Financial Accounting Knowledge, 11(2), 1-28. doi: 10.30479/jfak.2023.18856.3098

MLA

Kordestani, G. , , Eskandari, R. , and Asoodeh, M. . "The Role of Fundamental Accounting Variables in Determining Systematic Risk: Financially Distressed and Healthy Corporates", Financial Accounting Knowledge, 11, 2, 2024, 1-28. doi: 10.30479/jfak.2023.18856.3098

HARVARD

Kordestani, G., Eskandari, R., Asoodeh, M. (2024). 'The Role of Fundamental Accounting Variables in Determining Systematic Risk: Financially Distressed and Healthy Corporates', Financial Accounting Knowledge, 11(2), pp. 1-28. doi: 10.30479/jfak.2023.18856.3098

CHICAGO

G. Kordestani , R. Eskandari and M. Asoodeh, "The Role of Fundamental Accounting Variables in Determining Systematic Risk: Financially Distressed and Healthy Corporates," Financial Accounting Knowledge, 11 2 (2024): 1-28, doi: 10.30479/jfak.2023.18856.3098

VANCOUVER

Kordestani, G., Eskandari, R., Asoodeh, M. The Role of Fundamental Accounting Variables in Determining Systematic Risk: Financially Distressed and Healthy Corporates. Financial Accounting Knowledge, 2024; 11(2): 1-28. doi: 10.30479/jfak.2023.18856.3098

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