Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approach
The Johannesburg Stock Exchange has been experiencing high levels of delisting over the past decade, drawing attention to the effectiveness of the mechanisms used to promote the recovery of financially distressed firms. This study analyses the factors that explain the recovery of financially distres...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2025.2521466 |
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| author | Leonard Makuvaza Sevias Guvuriro Richard Chamboko Johan Coetzee |
| author_facet | Leonard Makuvaza Sevias Guvuriro Richard Chamboko Johan Coetzee |
| author_sort | Leonard Makuvaza |
| collection | DOAJ |
| description | The Johannesburg Stock Exchange has been experiencing high levels of delisting over the past decade, drawing attention to the effectiveness of the mechanisms used to promote the recovery of financially distressed firms. This study analyses the factors that explain the recovery of financially distressed firms and estimates the firms’ time to recovery using a Cox proportional hazards model. Company annual financial statements curated by the IRESS database are used. The study contributes to the literature by illustrating the role of non-financial variables such as firm characteristics, distress events and business cycles in financial recovery. The median recovery time for financially distressed firms is about nine years suggesting a high risk of delisting. In addition, the study concludes that firm characteristics, distress variables, financial variables and business cycle indicators explain the recovery of distressed firms. Practically, distress variables can be used as early warning indicators of firms that are at risk of delisting thereby facilitating timely implementation of financial recovery mechanisms. The policy implication of the findings on business cycles is the need for the South Africa Reserve Bank to monitor economic expectations constantly and for policies that build confidence in the economy to enhance financial recovery on stock markets. |
| format | Article |
| id | doaj-art-9d91d5ed5f14497dbf7fb1bc8bc3e97c |
| institution | Matheson Library |
| issn | 2332-2039 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj-art-9d91d5ed5f14497dbf7fb1bc8bc3e97c2025-07-01T01:47:02ZengTaylor & Francis GroupCogent Economics & Finance2332-20392025-12-0113110.1080/23322039.2025.2521466Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approachLeonard Makuvaza0Sevias Guvuriro1Richard Chamboko2Johan Coetzee3Department of Economics and Finance, University of the Free State, Bloemfontein, South AfricaDepartment of Economics and Finance, University of the Free State, Bloemfontein, South AfricaDepartment of Economics and Finance, University of the Free State, Bloemfontein, South AfricaDepartment of Economics and Finance, University of the Free State, Bloemfontein, South AfricaThe Johannesburg Stock Exchange has been experiencing high levels of delisting over the past decade, drawing attention to the effectiveness of the mechanisms used to promote the recovery of financially distressed firms. This study analyses the factors that explain the recovery of financially distressed firms and estimates the firms’ time to recovery using a Cox proportional hazards model. Company annual financial statements curated by the IRESS database are used. The study contributes to the literature by illustrating the role of non-financial variables such as firm characteristics, distress events and business cycles in financial recovery. The median recovery time for financially distressed firms is about nine years suggesting a high risk of delisting. In addition, the study concludes that firm characteristics, distress variables, financial variables and business cycle indicators explain the recovery of distressed firms. Practically, distress variables can be used as early warning indicators of firms that are at risk of delisting thereby facilitating timely implementation of financial recovery mechanisms. The policy implication of the findings on business cycles is the need for the South Africa Reserve Bank to monitor economic expectations constantly and for policies that build confidence in the economy to enhance financial recovery on stock markets.https://www.tandfonline.com/doi/10.1080/23322039.2025.2521466Financial recoveryfinancial distressfirm delistingstock marketJohannesburg Stock ExchangeEconomics |
| spellingShingle | Leonard Makuvaza Sevias Guvuriro Richard Chamboko Johan Coetzee Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approach Cogent Economics & Finance Financial recovery financial distress firm delisting stock market Johannesburg Stock Exchange Economics |
| title | Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approach |
| title_full | Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approach |
| title_fullStr | Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approach |
| title_full_unstemmed | Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approach |
| title_short | Modelling the recovery of distressed firms on the Johannesburg Stock Exchange: a Cox proportional hazard model approach |
| title_sort | modelling the recovery of distressed firms on the johannesburg stock exchange a cox proportional hazard model approach |
| topic | Financial recovery financial distress firm delisting stock market Johannesburg Stock Exchange Economics |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2025.2521466 |
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