Detecting financial distress
This paper examines two types of statistical tests, which are multiple discriminant analysis (MDA) and the logit model to detect financially distressed companies. Comparison between the two statistical tests is implemented to identiy factors that could differentiate financially distressed companies...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Universiti Utara Malaysia
2005
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| Online Access: | https://repo.uum.edu.my/id/eprint/15/1/Nur_Adiana_Hiau_bt_Abdullah.pdf |
| _version_ | 1825739623043694592 |
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| author | Abdullah, Nur Adiana Hiau Ahmad, Abd Halim @ Hamilton |
| author_facet | Abdullah, Nur Adiana Hiau Ahmad, Abd Halim @ Hamilton |
| author_sort | Abdullah, Nur Adiana Hiau |
| collection | UUM |
| description | This paper examines two types of statistical tests, which are multiple discriminant analysis (MDA) and the logit model to detect financially distressed companies. Comparison between the two statistical tests is implemented to identiy factors that could differentiate financially distressed companies from the healthy company. Among the fifteen explanators, M D A shows that the current ratios, net income to total asset, and sales to current asset, are the indicators of financially distressed companies. Other than net income to total asset, the logit model provides two different ratios which are shareholders’filnd to total liabilities, and cash flow from financing to total liabilities, to identi@ financially distressed companies. It zuasfound that the logit model could accurately predict 91.5% of the estimation sample and 90% of the holdout sample whereas the discriminant model shows an overall
accuracy rate of 84.5% and 80% for the estimatiorl and the holdout sample respectively. |
| first_indexed | 2024-07-04T05:12:28Z |
| format | Article |
| id | uum-15 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T05:12:28Z |
| publishDate | 2005 |
| publisher | Universiti Utara Malaysia |
| record_format | eprints |
| spelling | uum-152010-06-28T09:48:09Z https://repo.uum.edu.my/id/eprint/15/ Detecting financial distress Abdullah, Nur Adiana Hiau Ahmad, Abd Halim @ Hamilton HG Finance This paper examines two types of statistical tests, which are multiple discriminant analysis (MDA) and the logit model to detect financially distressed companies. Comparison between the two statistical tests is implemented to identiy factors that could differentiate financially distressed companies from the healthy company. Among the fifteen explanators, M D A shows that the current ratios, net income to total asset, and sales to current asset, are the indicators of financially distressed companies. Other than net income to total asset, the logit model provides two different ratios which are shareholders’filnd to total liabilities, and cash flow from financing to total liabilities, to identi@ financially distressed companies. It zuasfound that the logit model could accurately predict 91.5% of the estimation sample and 90% of the holdout sample whereas the discriminant model shows an overall accuracy rate of 84.5% and 80% for the estimatiorl and the holdout sample respectively. Universiti Utara Malaysia 2005 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/15/1/Nur_Adiana_Hiau_bt_Abdullah.pdf Abdullah, Nur Adiana Hiau and Ahmad, Abd Halim @ Hamilton (2005) Detecting financial distress. International Journal of Management Studies (IJMS), 12 (1). pp. 77-95. ISSN 0127-8983 http://ijms.uum.edu.my |
| spellingShingle | HG Finance Abdullah, Nur Adiana Hiau Ahmad, Abd Halim @ Hamilton Detecting financial distress |
| title | Detecting financial distress |
| title_full | Detecting financial distress |
| title_fullStr | Detecting financial distress |
| title_full_unstemmed | Detecting financial distress |
| title_short | Detecting financial distress |
| title_sort | detecting financial distress |
| topic | HG Finance |
| url | https://repo.uum.edu.my/id/eprint/15/1/Nur_Adiana_Hiau_bt_Abdullah.pdf |
| work_keys_str_mv | AT abdullahnuradianahiau detectingfinancialdistress AT ahmadabdhalimhamilton detectingfinancialdistress |