Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model
This study compares three methodologies for identifying financially distressed companies, multiple discriminant analysis (MDA), logistic regression and hazard model. In a sample of 52 distressed and non-distressed companies with a holdout sample of 20 companies, the predictions of the hazard model...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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EuroJournals Publishing, Inc.
2008
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| Subjects: | |
| Online Access: | https://repo.uum.edu.my/id/eprint/1616/1/Nur_Adiana_Hiau_Abdullah%2C.pdf |
| _version_ | 1803624313264275456 |
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| author | Abdullah, Nur Adiana Hiau Ahmad, Abd Halim Ahmad, Abd Halim @ Hamilton Md Rus, Rohani |
| author_facet | Abdullah, Nur Adiana Hiau Ahmad, Abd Halim Ahmad, Abd Halim @ Hamilton Md Rus, Rohani |
| author_sort | Abdullah, Nur Adiana Hiau |
| collection | UUM |
| description | This study compares three methodologies for identifying financially distressed companies, multiple discriminant analysis (MDA), logistic regression and hazard model. In
a sample of 52 distressed and non-distressed companies with a holdout sample of 20 companies, the predictions of the hazard model were accurate in 94.9 % of the cases examined. This was a higher accuracy rate than generated by the other two methodologies.However, when the holdout sample is included in the sample analyzed, MDA had the highest accuracy rate at 85%. Among the ten determinants of corporate performance examined, the ratio of debt to total assets was a significant predictor of corporate distress
regardless of the methodology used. In addition, net income growth was another significant predictor in MDA, whereas the return on assets was an important predictor when the
logistic regression and hazard model methodologies were used. |
| first_indexed | 2024-07-04T05:16:23Z |
| format | Article |
| id | uum-1616 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T05:16:23Z |
| publishDate | 2008 |
| publisher | EuroJournals Publishing, Inc. |
| record_format | dspace |
| spelling | uum-16162020-11-04T02:01:44Z https://repo.uum.edu.my/id/eprint/1616/ Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model Abdullah, Nur Adiana Hiau Ahmad, Abd Halim Ahmad, Abd Halim @ Hamilton Md Rus, Rohani HG Finance This study compares three methodologies for identifying financially distressed companies, multiple discriminant analysis (MDA), logistic regression and hazard model. In a sample of 52 distressed and non-distressed companies with a holdout sample of 20 companies, the predictions of the hazard model were accurate in 94.9 % of the cases examined. This was a higher accuracy rate than generated by the other two methodologies.However, when the holdout sample is included in the sample analyzed, MDA had the highest accuracy rate at 85%. Among the ten determinants of corporate performance examined, the ratio of debt to total assets was a significant predictor of corporate distress regardless of the methodology used. In addition, net income growth was another significant predictor in MDA, whereas the return on assets was an important predictor when the logistic regression and hazard model methodologies were used. EuroJournals Publishing, Inc. 2008 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/1616/1/Nur_Adiana_Hiau_Abdullah%2C.pdf Abdullah, Nur Adiana Hiau and Ahmad, Abd Halim and Ahmad, Abd Halim @ Hamilton and Md Rus, Rohani (2008) Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model. International Research Journal of Finance and Economics (15). pp. 201-217. ISSN 1450-2887 http://www.eurojournals.com/irjfe%2015%20nur.pdf |
| spellingShingle | HG Finance Abdullah, Nur Adiana Hiau Ahmad, Abd Halim Ahmad, Abd Halim @ Hamilton Md Rus, Rohani Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model |
| title | Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model |
| title_full | Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model |
| title_fullStr | Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model |
| title_full_unstemmed | Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model |
| title_short | Predicting corporate failure of Malaysians listed companies: Comparing multiple discriminant analysis, logistic regression and the hazard model |
| title_sort | predicting corporate failure of malaysians listed companies comparing multiple discriminant analysis logistic regression and the hazard model |
| topic | HG Finance |
| url | https://repo.uum.edu.my/id/eprint/1616/1/Nur_Adiana_Hiau_Abdullah%2C.pdf |
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