Volume 38, Issue 5 (September 2010)

    Analysis of Financial Distress Prediction Models

    (Received 25 September 2009; accepted 8 February 2010)

    Published Online: 2010

    CODEN: JTEOAD

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    Abstract

    The purpose of this study is to evaluate financial and non-financial variables using the bankruptcy prediction model. Considering Taiwan companies listed between 2001 and 2005, the estimation sample comprises 140 firms (70 failing and 70 non-failing), and the validation sample comprises 52 firms (26 failing and 26 non-failing). In contrast to previous studies, this paper provides a corporate governance index as non-financial variables to predict financial distress along with financial index. Logistic regression is applied to examine these samples for 3 year data prior to business failure. In the estimation sample, the indexes combining both financial and corporate governance indexes gave the most accurate predictions. In the validation sample, the financial variables yielded the most accurate predictions.


    Author Information:

    Lee, Li-Tze
    Dept. of Accounting Information, Overseas Chinese Univ., Taichung,

    Fan, Chiang Ku
    Dept. of Risk Management and Insurance, Shih Chien Univ., Chung-Shan District, Taipei,

    Hung, Hsiang-Wen
    Dept. of Accounting, National Changhua Univ. of Education, Changhua,

    Ling, Yu-Chun
    Dept. of Finance, Ling Tung Univ., Taichung,


    Stock #: JTE102759

    ISSN: 0090-3973

    DOI: 10.1520/JTE102759

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    Author
    Title Analysis of Financial Distress Prediction Models
    Symposium , 0000-00-00
    Committee E11