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Corporate prediction models, ratios or regression analysis?
Bijnen,E.J. Wijn,M.F.C.M.
Bijnen,E.J.
Wijn,M.F.C.M.
Abstract
The models developed in the literature with respect to the prediction of a company s failure are based on ratios. It has been shown before that these models should be rejected on theoretical grounds. Our study of industrial companies in the Netherlands shows that the ratios which are used in insolvency models do not have the predicting properties they are credited with. We have investigated whether the alternative for ratios mentioned in the literature, i.e. the regression analysis, gives reliable insolvency models. However, the regression analysis appears to be useful in a limited sense only, depending on the size of the company.
Description
Pagination: 23
Date
1994
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Publisher
Unknown Publisher
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658.pdf
Adobe PDF, 74.72 KB
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Keywords
Regression Analysis, Corporate Models, Corporate Performance, management science
Citation
Bijnen, E J & Wijn, M F C M 1994, Corporate prediction models, ratios or regression analysis? Research memorandum / Tilburg University, Department of Economics, vol. FEW 658, vol. FEW 658, Unknown Publisher.