Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

The Relationship Between Financial Failure and Market Value: An Empirical Study Using a Sample of Industrial Firms Listed at Qatar Stock Exchange

Author(s): Alaa Al Saedi, Suhail A. Al Timimi

This study aims to detect the existence of signs of financial failure for industrial companies listed on the Qatar Stock Exchange. The study uses the Altman Model to calculate the financial failure indicators. It also measures the relationship between the financial failure score and the market value of these companies. The analysis is based on the belief that the financial reports provide information to investors which can be taken as indicators of the financial failure or success of companies. This information will affect investment decisions which, in turn, will be reflected in the share price. The study uses financial data for a sample of seven Qatari industrial companies for a period of 10 years from 2008 to 2017. The researchers find that most Qatari industrial companies do not suffer signs of financial failure. Furthermore, the regression analysis of the panel data indicates that there is a positive relationship of statistical significance between financial failure indicators and the market value of these companies. This is due to investors’ investment decisions being affected by the financial failure indicators used in this study.