The Financial Failure Prediction Model Uses The Assessment Scores of Listed Companies and Sustainability Risk Scores of Listed Companies on The Stock Exchange of Thailand

Abstract

This research aims to develop a model for predicting the likelihood of financial failure among companies listed on the Stock Exchange of Thailand. This study is quantitative research that employs statistical methods to analyze the relationship between the evaluation scores of listed companies and sustainability risk scores, as well as other financial factors that may impact a company's stability and the likelihood of financial failure. The independent variables considered in this study are related to corporate governance and sustainability risk, specifically the Corporate Governance Rating, Sustainability Assessment Score, and Sustainability Risk Score. The dependent variable is the likelihood of financial failure, which is measured using the Zmijewski X-Score (1984). The study utilizes data from listed companies in 2024, the data was analyzed using binary logistic regression. The findings indicate that the Corporate Governance Rating and Sustainability Assessment Score do not have a statistically significant relationship with the likelihood of financial failure. In contrast, the Sustainability Risk Score shows a significant positive relationship with financial failure, suggesting that companies with higher sustainability risks are more likely to experience financial distress. Furthermore, the Interest Coverage Ratio demonstrates a significant negative relationship with financial failure, indicating that companies with stronger debt-servicing capabilities are less likely to face financial distress. These findings are essential for corporate executives, investors, and regulatory bodies, as they offer insights into enhancing corporate governance practices and developing strategies to mitigate sustainability risks, ultimately contributing to the financial stability of companies.