A review of financial distress prediction models: logistic regression and multivariate discriminant analysis
In corporate finance, the early prediction of financial distress is considered more important as another occurrence of business risks. The study presents a review of literature for early prediction of financial bankruptcy. It contributes to the formation of a systematic review of the literature rega...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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OMJP Alpha Publishing
2017
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| Subjects: | |
| Online Access: | https://repo.uum.edu.my/id/eprint/26141/1/IPJAS%201%203%202017%2013%2023.pdf |
| _version_ | 1825805418847272960 |
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| author | Hassan, Ehsan ul Zainuddin, Zaemah Nordin, Sabariah |
| author_facet | Hassan, Ehsan ul Zainuddin, Zaemah Nordin, Sabariah |
| author_sort | Hassan, Ehsan ul |
| collection | UUM |
| description | In corporate finance, the early prediction of financial distress is considered more important as another occurrence of business risks. The study presents a review of literature for early prediction of financial bankruptcy. It contributes to the formation of a systematic review of the literature regarding previous studies done in the field of bankruptcy. It addresses two most commonly used financial distress prediction models, i.e. multivariate discriminant analysis and logit. Models are discussed with their advantages and disadvantages. After methodological review, it seems that logit regression model (LRM) is more advantageous than multivariate discriminant analysis (MDA) for better prediction of financial bankruptcy. However, accurate prediction of bankruptcy is beneficial to improve the regulation of companies, to form policies for companies and to take any precautionary measures if any crisis is about to come in future. |
| first_indexed | 2024-07-04T06:32:00Z |
| format | Article |
| id | uum-26141 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:32:00Z |
| publishDate | 2017 |
| publisher | OMJP Alpha Publishing |
| record_format | eprints |
| spelling | uum-261412019-06-24T05:15:08Z https://repo.uum.edu.my/id/eprint/26141/ A review of financial distress prediction models: logistic regression and multivariate discriminant analysis Hassan, Ehsan ul Zainuddin, Zaemah Nordin, Sabariah HF5601 Accounting In corporate finance, the early prediction of financial distress is considered more important as another occurrence of business risks. The study presents a review of literature for early prediction of financial bankruptcy. It contributes to the formation of a systematic review of the literature regarding previous studies done in the field of bankruptcy. It addresses two most commonly used financial distress prediction models, i.e. multivariate discriminant analysis and logit. Models are discussed with their advantages and disadvantages. After methodological review, it seems that logit regression model (LRM) is more advantageous than multivariate discriminant analysis (MDA) for better prediction of financial bankruptcy. However, accurate prediction of bankruptcy is beneficial to improve the regulation of companies, to form policies for companies and to take any precautionary measures if any crisis is about to come in future. OMJP Alpha Publishing 2017 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/26141/1/IPJAS%201%203%202017%2013%2023.pdf Hassan, Ehsan ul and Zainuddin, Zaemah and Nordin, Sabariah (2017) A review of financial distress prediction models: logistic regression and multivariate discriminant analysis. Indian-Pacific Journal of Accounting and Finance (IPJAF), 1 (3). pp. 13-23. ISSN 2600-9161 http://ipjaf.omjpalpha.com/index.php/ipjaf/article/view/15 |
| spellingShingle | HF5601 Accounting Hassan, Ehsan ul Zainuddin, Zaemah Nordin, Sabariah A review of financial distress prediction models: logistic regression and multivariate discriminant analysis |
| title | A review of financial distress prediction models: logistic regression and multivariate discriminant analysis |
| title_full | A review of financial distress prediction models: logistic regression and multivariate discriminant analysis |
| title_fullStr | A review of financial distress prediction models: logistic regression and multivariate discriminant analysis |
| title_full_unstemmed | A review of financial distress prediction models: logistic regression and multivariate discriminant analysis |
| title_short | A review of financial distress prediction models: logistic regression and multivariate discriminant analysis |
| title_sort | review of financial distress prediction models logistic regression and multivariate discriminant analysis |
| topic | HF5601 Accounting |
| url | https://repo.uum.edu.my/id/eprint/26141/1/IPJAS%201%203%202017%2013%2023.pdf |
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