|Åstebro, Thomas; Winter, Joachim (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|
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.
Economics > Chairs > Chair of Empirical Economics
|Subjects:||300 Social sciences > 330 Economics|
|Deposited On:||15. Apr 2014 08:57|
|Last Modified:||29. Apr 2016 09:17|