Impact of Audit Committee and Financial Performance on Financial Distress Prediction: An Empirical Study of The Listed Companies in The Market for Alternative Investment (Mai)
- Ekapol Sakulpolphaisan , Faculty of Business Administration, Kasetsart University, Thailand
- Surang Hensawang , Faculty of Business Administration, Kasetsart University, Thailand
Businesses risk financial difficulties due to the current environment. Predicting financial distress is vital. Good company governance, like the Audit Committee, can reduce financial strain. Financial performance also affects economic suffering. A model for predicting the financial difficulty of enterprises based on the characteristics above is developed in this research. From 2017 through 2020, the model's sample includes all MAI listed companies, save those in the finance industry. The data are analyzed using logistic regression, and the robustness test is performed using the hold-out sample technique. The results reveal that audit committee meeting frequency and total liabilities to total assets are linked to financial distress. The findings demonstrated a negative association between financial distress and audit committee expertise, price-to-earnings ratio, return on assets, and revenue to total assets. The model's prediction accuracy for identifying one year, two years, and three years before the financial difficulty was 94.9 %, 96.6 %, and 96.1 %, respectively. The model's hold-out sample accuracy is between 89.0 and 98.0 %.