Corporate Reputation and Bankruptcy Risk

Góis, Alan Diógenes; Luca, Márcia Martins Mendes De; Lima, Gerlando Augusto Sampaio Franco de; Medeiros, Jislene Trindade

doi:10.1590/1807-7692bar2020180159

Alan Diógenes Góis

Universidade de São Paulo, São Paulo, SP, Brazil

(in memoriam) Authors Alan Diógenes Góis (in memoriam) Universidade de São Paulo, Departamento de Contabilidade e Atuária Av. Prof. Luciano Gualberto, 908, 05508-010, São Paulo, SP, Brazil alandgois@hotmail.com https://orcid.org/0000-0003-3534-6557

http://orcid.org/0000-0003-3534-6557

Márcia Martins Mendes De Luca

Universidade Federal do Ceará, Fortaleza, CE, Brazil

Márcia Martins Mendes De Luca Universidade Federal do Ceará, Faculdade de Economia, Administração, Atuária e Contabilidade Av. da Universidade, 2486, Benfica, 60020-180, Fortaleza, CE, Brazil marciadeluca@ufc.br https://orcid.org/0000-0002-9995-5637

http://orcid.org/0000-0002-9995-5637

Gerlando Augusto Sampaio Franco de Lima

University of Illinois at Urbana-Champaign, Illinois, USA

Gerlando Augusto Sampaio Franco de Lima University of Illinois at Urbana-Champaign, Gies College of Business 104 Wohlers Hall, 1206 South Sixth Street, Champaign, IL, 61820, USA gerlando@illinois.edu https://orcid.org/0000-0002-2414-2543

http://orcid.org/0000-0002-2414-2543

Jislene Trindade Medeiros

Universidade Federal do Ceará, Fortaleza, CE, Brazil

Jislene Trindade Medeiros Universidade Federal do Ceará, Faculdade de Economia, Administração, Atuária e Contabilidade Av. da Universidade, 2486, Benfica, 60020-180, Fortaleza, CE, Brazil jislenetm@gmail.com https://orcid.org/0000-0003-0941-0228

http://orcid.org/0000-0003-0941-0228

(in memoriam)

Carlos Eduardo Facin Lavarda was the associate editor for this article.

Editor-in-chief: Carlo Gabriel Porto Bellini

Editorial assistant: Luciane Kato Kiwara

Authors Alan Diógenes Góis (in memoriam) Universidade de São Paulo, Departamento de Contabilidade e Atuária Av. Prof. Luciano Gualberto, 908, 05508-010, São Paulo, SP, Brazil alandgois@hotmail.com https://orcid.org/0000-0003-3534-6557

Márcia Martins Mendes De Luca Universidade Federal do Ceará, Faculdade de Economia, Administração, Atuária e Contabilidade Av. da Universidade, 2486, Benfica, 60020-180, Fortaleza, CE, Brazil marciadeluca@ufc.br https://orcid.org/0000-0002-9995-5637

Gerlando Augusto Sampaio Franco de Lima University of Illinois at Urbana-Champaign, Gies College of Business 104 Wohlers Hall, 1206 South Sixth Street, Champaign, IL, 61820, USA gerlando@illinois.edu https://orcid.org/0000-0002-2414-2543

Jislene Trindade Medeiros Universidade Federal do Ceará, Faculdade de Economia, Administração, Atuária e Contabilidade Av. da Universidade, 2486, Benfica, 60020-180, Fortaleza, CE, Brazil jislenetm@gmail.com https://orcid.org/0000-0003-0941-0228

Author contributions

1^st author: conceptualization (equal), data curation (equal), formal analysis (equal), investigation (equal), methodology (lead), project administration (equal), resources (equal), software (equal), supervision (equal), validation (equal), visualization (equal), writing-original draft (equal), writing-review and editing (supporting).

2^nd author: conceptualization (equal), data curation (equal), formal analysis (equal), investigation (equal), methodology (supporting), project administration (equal), resources (equal), software (equal), supervision (equal), validation (equal), visualization (equal), writing-original draft (equal), writing-review and editing (lead).

3^rd author: conceptualization (equal), data curation (equal), formal analysis (equal), investigation (equal), methodology (supporting), project administration (equal), resources (equal), software (equal), supervision (equal), validation (equal), visualization (equal), writing-original draft (equal), writing-review and editing (supporting).

4^th author: conceptualization (equal), data curation (equal), formal analysis (equal), investigation (equal), methodology (supporting), project administration (supporting), resources (equal), software (equal), supervision (equal), validation (equal), visualization (equal), writing-original draft (equal), writing-review and editing (supporting).

COUNTRY	ALTM
COUNTRY	Frequency	Percent	Cumulative
CANADA	40	0.87	0.87
GERMANY	8	0.17	1.05
FINLAND	1	0.02	1.07
IRELAND	62	1.35	2.42
JAPAN	6	0.13	2.56
SINGAPORE	9	0.20	2.75
SPAIN	2	0.04	2.80
SWEDEN	1	0.02	2.82
SWITZERLAND	6	0.13	2.95
UNITED KINGDOM	30	0.66	3.60
UNITED STATES	4.413	96.40	100
Total	4.578	100

Variable		Metric	Operationalization
Dependent	ALTM	Bankruptcy risk	0.3(NI/TA) + (S/TA) + 1.4(RE/TA) + 1.2(WC/TA) + 0.6(MV/TL) NI = net income; TA = total assets; S = sales; RE = retained earnings; WC = working capital; MV = market value; TL = total liabilities
Independent	REP	Corporate reputation	Overall WMAC score
Controls	ROA	Return on assets	Net income/total assets
	LEV	Leverage	Total debt/total assets
	INT	Intangibility	Market value/shareholders' equity
	EPS	Earnings per share	Natural logarithm of earnings per share excluding extraordinary items
	SIZE	Company size	Natural logarithm of total assets
	IFRS	International Financial Reporting Standards	Dummy variable in which 1 represents years following the adoption of IFRS; 0 otherwise
	AUD	Audit quality	Dummy variable in which 1 represents firm audited by one of the Big Four; 0 otherwise
	CRIS	Financial crisis	Dummy variable in which 1 represents the year 2008; 0 otherwise
Controls	GDP	Gross Domestic Product	Annual variation in GDP
	RL	Rule of law	Rule of law captures perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence
	RQ	Regulatory quality	Regulatory quality captures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development

	ALTM			Student's t (p-value)	Mann-Whitney test (p-value)
	Total	0	1	Student's t (p-value)	Mann-Whitney test (p-value)
Mean	4.26	4.24	4.27	0.797	0.552
Standard deviation	3.40	0.662	0.631
Minimum	0.003	0.003	0.003
Median	2.83	2.79	2.86
Maximum	6.80	6.80	6.56
N	4578	2187	2391

	REP			Student's t (p-value)	Mann-Whitney test (p-value)
	Total	0	1	Student's t (p-value)	Mann-Whitney test (p-value)
Mean	3.30	3.23	3.42	0.004	0.000
Standard Deviation	3.25	3.18	3.32
Minimum	0	0	0
Median	4.69	4.44	4.98
Maximum	8.80	8.40	8.80
N	4578	2437	2141

	ALTM	REP	ROA	LEV	INT	EPS	SIZE	IFRS	AUD	CRIS	GDP	RL	RQ
ALTM	1
REP	0.031 ^ = significant at 5%;	1
ROA	0.511 ^* ***** = significant at 1%;	0.013	1
LEV	-0.608 ^* ***** = significant at 1%;	-0.025 ^* * = significant at 10%.	-0.216 ^* ***** = significant at 1%;	1
INT	0.353 ^* ***** = significant at 1%;	0.023	0.255 ^* ***** = significant at 1%;	0.119 ^* ***** = significant at 1%;	1
EPS	0.200 ^* ***** = significant at 1%;	0.008	0.138 ^* ***** = significant at 1%;	-0.118 ^* ***** = significant at 1%;	0.094 ^* ***** = significant at 1%;	1
SIZE	-0.440 ^* ***** = significant at 1%;	0.002 ^* * = significant at 10%.	-0.064 ^* ***** = significant at 1%;	0.378 ^* ***** = significant at 1%;	-0.259 ^* ***** = significant at 1%;	-0.236 ^* ***** = significant at 1%;	1
IFRS	0.2646 ^* ***** = significant at 1%;	-0.0465 ^ = significant at 5%;	-0.0989 ^* ***** = significant at 1%;	0.1381 ^* ***** = significant at 1%;	-0.1444 ^* ***** = significant at 1%;	-0.3360 ^* ***** = significant at 1%;	0.3745 ^* ***** = significant at 1%;	1
AUD	0.053 ^* ***** = significant at 1%;	0.005	0.219 ^* ***** = significant at 1%;	0.133 ^* ***** = significant at 1%;	0.015	0.057 ^* ***** = significant at 1%;	0.283 ^* ***** = significant at 1%;	-0.0589 ^* ***** = significant at 1%;	1
CRIS	-0.041 ^* ***** = significant at 1%;	-0.001	0.007	-0.003	-0.098 ^* ***** = significant at 1%;	-0.003	-0.019	-0.0001 ^* ***** = significant at 1%;	0.001	1
GDP	-0.063 ^* ***** = significant at 1%;	-0.006	0.042 ^* ***** = significant at 1%;	-0.008	0.110 ^* ***** = significant at 1%;	0.031 ^ = significant at 5%;	-0.036 ^ = significant at 5%;	-0.0408 ^* ***** = significant at 1%;	0.003	-0.318 ^* ***** = significant at 1%;	1
RL	-0.023	0.017	0.027 ^* * = significant at 10%.	-0.050 ^* ***** = significant at 1%;	0.060 ^* ***** = significant at 1%;	0.028 ^ = significant at 5%;	-0.117 ^* ***** = significant at 1%;	0.1494 ^* ***** = significant at 1%;	0.081 ^* ***** = significant at 1%;	0.111 ^* ***** = significant at 1%;	-0.010	1
RQ	-0.011	0.006	0.036 ^* ***** = significant at 1%;	-0.043 ^* ***** = significant at 1%;	0.041 ^* ***** = significant at 1%;	-0.019	-0.076 ^* ***** = significant at 1%;	0.2697 ^* ***** = significant at 1%;	0.024 ^* * = significant at 10%.	0.168 ^* ***** = significant at 1%;	0.085 ^* ***** = significant at 1%;	0.515 ^* ***** = significant at 1%;	1

Variable	Descriptives		Sample_1	Sample_2	Sample_3	VIF
Variable	Mean	Std. dev.	Coeff.	Coeff.	Coeff.	VIF
REP	3.30	3.2438	0.0035^ = significant at 5%;	0.0006^ = significant at 5%;	0.0037^* * = significant at 10%.	1.00
ROA	0.1079	0.0805	2.4134^* ***** = significant at 1%;	2.4401^* ***** = significant at 1%;	2.5664^* ***** = significant at 1%;	1.66
LEV	0.6218	0.2043	-1.4014^* ***** = significant at 1%;	-1.4015^* ***** = significant at 1%;	-1.4479^* ***** = significant at 1%;	1.53
INT	1.3542	0.6812	0.1961^* ***** = significant at 1%;	0.1906^* ***** = significant at 1%;	0.2348^* ***** = significant at 1%;	1.65
EPS	2.7297	2.8755	0.0095^* ***** = significant at 1%;	0.0346^ = significant at 5%;	0.0024^* * = significant at 10%.	1.10
SIZE	23.4274	1.9831	-0.0679^* ***** = significant at 1%;	-0.0703^* ***** = significant at 1%;	-0.0587^* ***** = significant at 1%;	1.46
IFRS	0.3843	0.2789	0.0005	0.0119	0.0566	1.24
AUD	0.9815	0.1347	0.1426^* ***** = significant at 1%;	0.0995^ = significant at 5%;	0.4975^* ***** = significant at 1%;	1.11
CRIS	0.0767	0.2661	0.0515^* ***** = significant at 1%;	0.0522^* ***** = significant at 1%;	0.0132	1.18
GDP	1.7724	1.6663	-0.0007	-0.0012	-0.0022	1.16
RL	1.6090	0.083	0.1429^ = significant at 5%;	0.0961^ = significant at 5%;	0.4349^* ***** = significant at 1%;	1.38
RQ	1.4502	0.1565	0.0956^* ***** = significant at 1%;	0.9258^ = significant at 5%;	0.0148^* * = significant at 10%.	1.39
Constant	-	-	-0.9083^* ***** = significant at 1%;	-0.9257^* ***** = significant at 1%;	-0.6710^ = significant at 5%;	-
F			1103.03^* ***** = significant at 1%;	882.62^* ***** = significant at 1%;	126.89
Within			0.7505	0.7501	0.7603
Between			0.8631	0.6533	0.7143
Overall			0.7509	0.7497	0.7596
N			4.578	4.413	165

Variable	Descriptives		Sample_1	Sample_2	Sample_3	VIF
Variable	Mean	Std. dev.	Coeff.	Coeff.	Coeff.	VIF
REP_WOUT	6.3697	0.8677	0.0372^* ***** = significant at 1%;	0.0099^ = significant at 5%;	0.0216^* * = significant at 10%.	1.04
ROA	0.1078	0.0722	2.1759^* ***** = significant at 1%;	2.7016^* ***** = significant at 1%;	2.9223^* ***** = significant at 1%;	1.88
LEV	0.6223	0.2002	-1.3903^* ***** = significant at 1%;	-1.4017^* ***** = significant at 1%;	-1.4968^* ***** = significant at 1%;	1.50
INT	1.3427	0.6492	0.2243^* ***** = significant at 1%;	0.1778^* ***** = significant at 1%;	0.2111^* ***** = significant at 1%;	1.81
EPS	2.7249	2.9266	0.0097^* ***** = significant at 1%;	0.0378^ = significant at 5%;	0.0033^* * = significant at 10%.	1.10
SIZE	23.3912	1.9123	0.0690^* ***** = significant at 1%;	0.0686^* ***** = significant at 1%;	0.0587^* ***** = significant at 1%;	1.42
IFRS	0.1056	0.3024	0.0014	0.0447^* * = significant at 10%.	0.0873^* * = significant at 10%.	1.47
AUD	0.9819	1.1332	0.1318^* ***** = significant at 1%;	0.1211^ = significant at 5%;	0.1841	1.12
CRIS	0.0785	0.2690	0.0638^ = significant at 5%;	0.0716^ = significant at 5%;	0.0088	1.18
GDP	1.7648	1.7239	0.0054	0.0004	0.0079	1.15
RL	1.6104	0.0786	0.1244	0.0565	0.3948	1.37
RQ	1.4510	0.1545	0.1647^* ***** = significant at 1%;	0.2151^ = significant at 5%;	0.1491^* * = significant at 10%.	1.38
Constant	-	-	-1.2311^* ***** = significant at 1%;	-0.8163^ = significant at 5%;	-0.6164^* * = significant at 10%.
F			515.34^* ***** = significant at 1%;	495.07^* ***** = significant at 1%;	81.48^* ***** = significant at 1%;
Within			0.7316	0.7607	0.8069
Between			0.7932	0.8721	0.8485
Overall			0.7318	0.7614	0.8075
N			2.391	2.286	105

\begin{matrix} {ALTM}_{it} = β_{0} + β_{1} {REP}_{it - 1} + β_{2} {ROA}_{it} + β_{3} {LEV}_{it} + β_{4} {INT}_{it} + β_{5} {EPS}_{it} + β_{6} {SIZE}_{it} + \\ β_{7} {IFRS}_{it} β_{8} {AUD}_{it} + β_{9} {CRIS}_{it} β_{10} {GDP}_{it} + β_{11} {RL}_{it} + β_{12} {RQ}_{it} + ε_{it} \end{matrix}

[1] (in memoriam)

	ALTM	REP	ROA	LEV	INT	EPS	SIZE	IFRS	AUD	CRIS	GDP	RL	RQ
ALTM	1
REP	0.031 ^ = significant at 5%;	1
ROA	0.511 ^* ***** = significant at 1%;	0.013	1
LEV	-0.608 ^* ***** = significant at 1%;	-0.025 ^* * = significant at 10%.	-0.216 ^* ***** = significant at 1%;	1
INT	0.353 ^* ***** = significant at 1%;	0.023	0.255 ^* ***** = significant at 1%;	0.119 ^* ***** = significant at 1%;	1
EPS	0.200 ^* ***** = significant at 1%;	0.008	0.138 ^* ***** = significant at 1%;	-0.118 ^* ***** = significant at 1%;	0.094 ^* ***** = significant at 1%;	1
SIZE	-0.440 ^* ***** = significant at 1%;	0.002 ^* * = significant at 10%.	-0.064 ^* ***** = significant at 1%;	0.378 ^* ***** = significant at 1%;	-0.259 ^* ***** = significant at 1%;	-0.236 ^* ***** = significant at 1%;	1
IFRS	0.2646 ^* ***** = significant at 1%;	-0.0465 ^ = significant at 5%;	-0.0989 ^* ***** = significant at 1%;	0.1381 ^* ***** = significant at 1%;	-0.1444 ^* ***** = significant at 1%;	-0.3360 ^* ***** = significant at 1%;	0.3745 ^* ***** = significant at 1%;	1
AUD	0.053 ^* ***** = significant at 1%;	0.005	0.219 ^* ***** = significant at 1%;	0.133 ^* ***** = significant at 1%;	0.015	0.057 ^* ***** = significant at 1%;	0.283 ^* ***** = significant at 1%;	-0.0589 ^* ***** = significant at 1%;	1
CRIS	-0.041 ^* ***** = significant at 1%;	-0.001	0.007	-0.003	-0.098 ^* ***** = significant at 1%;	-0.003	-0.019	-0.0001 ^* ***** = significant at 1%;	0.001	1
GDP	-0.063 ^* ***** = significant at 1%;	-0.006	0.042 ^* ***** = significant at 1%;	-0.008	0.110 ^* ***** = significant at 1%;	0.031 ^ = significant at 5%;	-0.036 ^ = significant at 5%;	-0.0408 ^* ***** = significant at 1%;	0.003	-0.318 ^* ***** = significant at 1%;	1
RL	-0.023	0.017	0.027 ^* * = significant at 10%.	-0.050 ^* ***** = significant at 1%;	0.060 ^* ***** = significant at 1%;	0.028 ^ = significant at 5%;	-0.117 ^* ***** = significant at 1%;	0.1494 ^* ***** = significant at 1%;	0.081 ^* ***** = significant at 1%;	0.111 ^* ***** = significant at 1%;	-0.010	1
RQ	-0.011	0.006	0.036 ^* ***** = significant at 1%;	-0.043 ^* ***** = significant at 1%;	0.041 ^* ***** = significant at 1%;	-0.019	-0.076 ^* ***** = significant at 1%;	0.2697 ^* ***** = significant at 1%;	0.024 ^* * = significant at 10%.	0.168 ^* ***** = significant at 1%;	0.085 ^* ***** = significant at 1%;	0.515 ^* ***** = significant at 1%;	1

Brasil

Brasil

Corporate Reputation and Bankruptcy Risk

Abstract