ABSTRACT
Aim/Purpose This paper aims to empirically quantify the financial distress caused by the COVID-19 pandemic on companies listed on Amman Stock Exchange (ASE). The paper also aims to identify the most important predictors of financial distress pre- and mid-pandemic. Background The COVID-19 pandemic has had a huge toll, not only on human lives but also on many businesses. This provided the impetus to assess the impact of the pandemic on the financial status of Jordanian companies. Methodology The initial sample comprised 165 companies, which was cleansed and reduced to 84 companies as per data availability. Financial data pertaining to the 84 companies were collected over a two-year period, 2019 and 2020, to empirically quantify the impact of the pandemic on companies in the dataset. Two approaches were employed. The first approach involved using Multiple Discriminant Analysis (MDA) based on Altman's (1968) model to obtain the Z-score of each company over the investigation period. The second approach involved developing models using Artificial Neural Networks (ANNs) with 15 standard financial ratios to find out the most important variables in predicting financial distress and create an accurate Financial Distress Prediction (FDP) model. Contribution This research contributes by providing a better understanding of how financial distress predictors perform during dynamic and risky times. The research confirmed that in spite of the negative impact of COVID-19 on the financial health of companies, the main predictors of financial distress remained relatively steadfast. This indicates that standard financial distress predictors can be regarded as being impervious to extraneous financial and/or health calamities. Findings Results using MDA indicated that more than 63% of companies in the dataset have a lower Z-score in 2020 when compared to 2019. There was also an 8% increase in distressed companies in 2020, and around 6% of companies came to be no longer healthy. As for the models built using ANNs, results show that the most important variable in predicting financial distress is the Return on Capital. The predictive accuracy for the 2019 and 2020 models measured using the area under the Receiver Operating Characteristic (ROC) graph was 87.5% and 97.6%, respectively. Recommendations Decision makers and top management are encouraged to focus on the identified for Practitioners highly liquid ratios to make thoughtful decisions and initiate preemptive actions to avoid organizational failure. Recommendations This research can be considered a stepping stone to investigating the impact of for Researchers COVID-19 on the financial status of companies. Researchers are recommended to replicate the methods used in this research across various business sectors to understand the financial dynamics of companies during uncertain times. Impact on Society Stakeholders in Jordanian-listed companies should concentrate on the list of most important predictors of financial distress as presented in this study. Future Research Future research may focus on expanding the scope of this study by including other geographical locations to check for the generalisability of the results. Future research may also include post-COVID-19 data to check for changes in results. © 2023 Informing Science Institute. All rights reserved.
ABSTRACT
The current research aims to investigate the financial management of Jordanian listed banks during the COVID-19 pandemic to identify the impact of the COVID-19 pandemic on the financial management efficiency of Jordanian banks during the pandemic. In addition, this research is based on a quantitative research approach as it incorporates financial management factors, including liquidity management, return on equity, return on assets, and financial performance, for identifying the efficiency of Jordanian banks during the COVID-19 pandemic. The analysis shows the financial indicators of banks listed on the Amman stock exchange. It has been found that the pandemic has affected the financial performance of these banks. On one side, although the total asset (size) of the banking sector is found to be increased on the other side, the debt ratio has also been increased, and it has created a significant negative impact on the financial performance. Hence, the findings indicate that the Jordanian government and the central bank of Jordan are still required to work on enhancing the financial performance of the financial sector in Jordan, as well as they should work on eliminating the impact of COVID-19 on the financial sector. Moreover, the reforms introduced by the Central bank of Jordan have a significant role in having this efficiency by the listed banks. This paper has highlighted that Jordan has a strong banking system that can cope with such uncertain situations due to its efficient financial management practices. The Jordanian government should further enhance the capabilities of the Jordanian banking sector through effective reforms to further contribute to the country's economic development. © 2022 Science Press. All rights reserved.
ABSTRACT
Relying on modern technological systems has always been one of the most important means used to mitigate the negative effects of crises facing the economies of countries, especially if these systems are harmonized and integrated to achieve a competitive advantage for the company and improve operational effectiveness. The aim of this study is to measure the impact of harmonizing activity-based-costing system with enterprise resource planning in improving the operational effectiveness of manufacturing companies listed on the Amman Stock Exchange by implementing industry type as a mediating variable. In order to achieve the study objectives, a designed questionnaire was developed and distributed to specialists in the accounting department, enterprise resource planning system managers, and costing managers within the study population. The study revealed that industry type as a mediating variable has modified the role of enterprise resource planning system integration with the activity-based-costing system in improving operations effectiveness, especially in the food, supplies, and agricultural sectors, and it is recommended for managers to develop and improve their current systems by attracting software specialists to build the integration between information systems. © 2022 IEEE.