ORCID: https://orcid.org/0000-0003-2460-619X
(2012):
More than a dummy: The probability of failure, survival and acquisition of firms in financial distress.
In: European Management Review, Vol. 9, No. 1: pp. 1-17
Abstract
We discuss three methodological issues concerning forecasts of the outcome of financial distress. First, we argue that rather than using a binary model the outcome of financial distress should be modeled using a multinomial specification that distinguishes between failure, survival as going concern, and acquisition. We also argue for a random rather than matched-pair sampling technique to better reflect decision making reality. Finally, we investigate the value of using industry-mean adjusted regressors. We find that the binary bankruptcy model is mis-specified relative to the multinomial model, that the matched sampling technique overstates model accuracy and that industry specific intercepts have better explanatory power than industry-adjusted regressors.
Item Type: | Journal article |
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Faculties: | Economics Economics > Chairs > Chair of Empirical Economics |
Subjects: | 300 Social sciences > 330 Economics |
Language: | English |
Item ID: | 20185 |
Date Deposited: | 15. Apr 2014 08:57 |
Last Modified: | 04. Nov 2020 13:01 |