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Correlation Analaysis of Market Performance and Bankruptcy Risk (Case of Healthcare Subsector Companies Listed in Indonesian Stock Exchange Period 2015 - 2018)

Samuel Samuel, Sylviana Maya Damayanti

Abstract


Abstract. Financial distress is an essential problem that would cause some bad effects for the companies. The companies’ management might not expect the risk earlier since their companies are in a good performance. However, financial distress can be happened to both of the good performance company and the bad performance company. Healthcare companies must focus on how they could attract more investors to be ready for the bankruptcy threat. Within the tough competition between companies, investors are also looking for the best company they could invest in and one of the perspectives in doing such decision is by observing the market performance. To solve the problem faced by both companies and investors, this study aims to develop the Altman’s Z-score model as the depiction of bankruptcy probability by observing its relationship with companies’ market performance using the correlation analysis by having stock price, share return and trading volume as the variables. The test result indicates that there are significant correlation between bankruptcy risk and return also bankruptcy risk and trading volume while there are no significant correlation between bankruptcy risk and stock price. Investors afterwards are recommended to use this findings to predict the condition of healthcare companies for preferred investments.

Keywords: Financial Distress, Bankruptcy, Healthcare, Market Performance, Altman’s Z-score, Correlation Analysis

 


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