Post-Pandemic Financial Distress Analysis: A Study of Retailer and Tourism Companies Listed in Bursa Malaysia Using the Grover Model

Abstract

 A corporation enters financial distress when its cash flows are insufficient to cover its debts to stakeholders, both financial and non-financial. When the Coronavirus Disease 2019 (COVID-19) pandemic struck the world and caused lockdowns that impacted many businesses, particularly those in the tourism and retail industries, the likelihood of financial distress increased. Thus, the Grover model is used to determine and analyse the financial distress prediction in retail and tourist companies listed on Bursa Malaysia. The Grover model categorises companies as financially distressed with a G-Score equal to or less than -0.02. Meanwhile, the G-Score for companies in the safe zone is equal to or greater than 0.01. Four companies were chosen, and a sample of data was collected from 2017 to 2021. The findings showed that during the COVID-19 pandemic from 2020 to 2021, three companies were under financial distress, especially those in the tourism and hospitality sectors. Meanwhile, retailer companies, especially those in food manufacturing, were not affected by this pandemic.