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...

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Main Authors: Abdullah, Nur Adiana Hiau, Ahmad, Abd Halim, Ahmad, Abd Halim @ Hamilton, Md Rus, Rohani
Format: Article
Language:English
Published: EuroJournals Publishing, Inc. 2008
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Online Access:http://repo.uum.edu.my/1616/1/Nur_Adiana_Hiau_Abdullah%2C.pdf
http://repo.uum.edu.my/1616/
http://www.eurojournals.com/irjfe%2015%20nur.pdf
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Institution: Universiti Utara Malaysia
Language: English
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spelling my.uum.repo.16162020-11-04T02:01:44Z http://repo.uum.edu.my/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 http://repo.uum.edu.my/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
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
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
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.
format Article
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
title 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_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_sort predicting corporate failure of malaysians listed companies: comparing multiple discriminant analysis, logistic regression and the hazard model
publisher EuroJournals Publishing, Inc.
publishDate 2008
url http://repo.uum.edu.my/1616/1/Nur_Adiana_Hiau_Abdullah%2C.pdf
http://repo.uum.edu.my/1616/
http://www.eurojournals.com/irjfe%2015%20nur.pdf
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