We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
More than a Dummy: The Probability of Failure, Survival and Acquisition of Firms in Financial Distress.
- Authors
ÅSTEBRO, THOMAS; WINTER, JOACHIM K.
- Abstract
We discuss three methodological issues concerning forecasts of the outcome of financial distress. First, we argue that rather than using a binary model the outcome of financial distress should be modeled using a multinomial specification that distinguishes between failure, survival as going concern, and acquisition. We also argue for a random rather than matched-pair sampling technique to better reflect decision making reality. Finally, we investigate the value of using industry-mean adjusted regressors. We find that the binary bankruptcy model is mis-specified relative to the multinomial model, that the matched sampling technique overstates model accuracy and that industry specific intercepts have better explanatory power than industry-adjusted regressors.
- Subjects
FINANCIAL crises; INDUSTRIAL management; BUSINESS forecasting; BUSINESS failures; BANKRUPTCY
- Publication
European Management Review, 2012, Vol 9, Issue 1, p1
- ISSN
1740-4754
- Publication type
Article
- DOI
10.1111/j.1740-4762.2011.01024.x