Studying the Relationship between Japanese Firms' Corporate Health and Results

  • Foo See Liang
  • Shaakalya Pathak


Japan is a key leading economy in the Asia Pacific region. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in this market (the Tokyo Stock Exchange). A linear regression has been conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a five-year period have also been analysed. The analysis covers the period from 2013 to 2017 (inclusive) and yields a statistically positive correlation between ROE and the Z-Score for the market. Japan registered moderate-to-strong mean and median Z-Scores. These findings further support the strong economic position of this market as an Asian giant.