Predicting the financial crisis of corporations operating in the stock market based on company-level and macroeconomic aspects (Comparison between pre- and post- Sanction Period)

Reviewing the research streams and literature shows that the ability to predict a financial crisis in past research is based on identification and examination of influential factors at company level. Although the environmental and institutional factors should be taken into account. Therefore, our research, with regard to other factors and their effects, has been examined and proved at company level, and used macroeconomic factors too. On the other hand, life cycle theory is one of most cited notions for explaining the crisis in capital markets, so we aim to test its validity in our economy too. Our study examines verification of life cycle theory in crisis prediction. Finally, the research model is tested in both pre-sanction and after-sanction time periods and results are compared with each other. Our research has been done using a sample of 122 companies during a 10-year time period from 2012 to 2022(1,220 observations). The main statistical method of our research consists of multi variable regression in a panel setting. We have used Premise statistical tests to determine the setting which our model should be estimated in. Our primary variables of interest are crises (at company level and life cycle phase). We use Z Altman and 141's Iranian Commerce Las Index as the proxy for Crisis measurement. The macroeconomic variables are captured at country level. We're aiming to compare the relationship between our variables in the pre and past sanction time period, so the model has been estimated separately in the pre and past sanction time range. Our findings show a significant relationship between both the company-level crisis and the life cycle phase. The significant reverse relationship between the company crisis and the life cycle phase (in presence of macroeconomic indicators) is valid using both crisis measures (Z Altman and 141's Iranian Commerce law). Descriptive statistics show a critical range that shows our sample of companies that are suffering from crises at company level. Also, we find that the quantity and quality of the relationship is different in pre and post-sanction time ranges, in the way that the coefficient of life cycle phase in our model is increased from .0579 (in the pre-sanction time period) to .0972 (in the past sanction time period). According to our findings, there is a negative relationship between the life cycle and a crisis. In other words, the life cycle theory is valid in Iranian companies. Furthermore, we can infer that the relationship has been boosted in the past sanction time range. The latter finding can be considered as a sign of increased explanation of life cycle theory in periods of sanction time the period. The main limitations of our research the lack of data for unlisted large companies and the shortness of the past sanction time period.