Predicting financial distress using financial and non-financial variables
This study attempts to clarify whether using a hybrid model based on non-financial variables and financial variables is able to provide a more accurate company financial distress prediction model than using a model based on financial variables only. The relationship between the model test results an...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
AOSIS
2015-04-01
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| Series: | Journal of Economic and Financial Sciences |
| Subjects: | |
| Online Access: | https://jefjournal.org.za/index.php/jef/article/view/93 |
| _version_ | 1818366148091052032 |
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| author | Francois Van Der Colff Frans Vermaak |
| author_facet | Francois Van Der Colff Frans Vermaak |
| author_sort | Francois Van Der Colff |
| collection | DOAJ |
| description | This study attempts to clarify whether using a hybrid model based on non-financial variables and financial variables is able to provide a more accurate company financial distress prediction model than using a model based on financial variables only. The relationship between the model test results and the De la Rey K-Score for the subject companies is tested, employing Cramer’s V statistical test. A movement towards a Cramer’s V value of one indicates a strengthening relationship, and a movement towards zero is an indication of a weakening relationship. Against this background, further empirical research is proposed to prove that a model combining financial variables with true non-financial variables provides a more accurate company distress prediction than a financial variable-only model. The limited evidence of a strengthening relationship found is insufficient to establish the superiority of the proposed model beyond reasonable doubt. |
| first_indexed | 2024-12-13T22:31:33Z |
| format | Article |
| id | doaj.art-f86bd26a769c479ab5b4b870fa826649 |
| institution | Directory Open Access Journal |
| issn | 1995-7076 2312-2803 |
| language | English |
| last_indexed | 2024-12-13T22:31:33Z |
| publishDate | 2015-04-01 |
| publisher | AOSIS |
| record_format | Article |
| series | Journal of Economic and Financial Sciences |
| spelling | doaj.art-f86bd26a769c479ab5b4b870fa8266492022-12-21T23:29:05ZengAOSISJournal of Economic and Financial Sciences1995-70762312-28032015-04-018124326010.4102/jef.v8i1.9390Predicting financial distress using financial and non-financial variablesFrancois Van Der Colff0Frans Vermaak1University of PretoriaUniversity of PretoriaThis study attempts to clarify whether using a hybrid model based on non-financial variables and financial variables is able to provide a more accurate company financial distress prediction model than using a model based on financial variables only. The relationship between the model test results and the De la Rey K-Score for the subject companies is tested, employing Cramer’s V statistical test. A movement towards a Cramer’s V value of one indicates a strengthening relationship, and a movement towards zero is an indication of a weakening relationship. Against this background, further empirical research is proposed to prove that a model combining financial variables with true non-financial variables provides a more accurate company distress prediction than a financial variable-only model. The limited evidence of a strengthening relationship found is insufficient to establish the superiority of the proposed model beyond reasonable doubt.https://jefjournal.org.za/index.php/jef/article/view/93financial distress predictionnon-financial variablesfinancial distress continuumneural networks |
| spellingShingle | Francois Van Der Colff Frans Vermaak Predicting financial distress using financial and non-financial variables Journal of Economic and Financial Sciences financial distress prediction non-financial variables financial distress continuum neural networks |
| title | Predicting financial distress using financial and non-financial variables |
| title_full | Predicting financial distress using financial and non-financial variables |
| title_fullStr | Predicting financial distress using financial and non-financial variables |
| title_full_unstemmed | Predicting financial distress using financial and non-financial variables |
| title_short | Predicting financial distress using financial and non-financial variables |
| title_sort | predicting financial distress using financial and non financial variables |
| topic | financial distress prediction non-financial variables financial distress continuum neural networks |
| url | https://jefjournal.org.za/index.php/jef/article/view/93 |
| work_keys_str_mv | AT francoisvandercolff predictingfinancialdistressusingfinancialandnonfinancialvariables AT fransvermaak predictingfinancialdistressusingfinancialandnonfinancialvariables |