CORPORATE FAILURE PREDICTION MODELS FOR ADVANCED RESEARCH IN CHINA: IDENTIFYING THE OPTIMAL CUT OFF POINT
Journal Title: Asian Economic and Financial Review - Year 2016, Vol 6, Issue 1
Abstract
The rapid growth of the Chinese economy has resulted in Chinese listed companies entering numerous global supply chains, and thereby contributing to the globalization of economies. Accurately predicting corporate distress is a crucial concern for enterprises, managers, investors, creditors, and supervisors. In this study, data from the 2003-2013 (excluding 2008) was analyzed, and a logistic model was applied to analyze critical factors. We developed Special Treatment (ST) model to measure distress of companies listed in China. The results indicate that the optimal cut-off point (one, two, three and fourth quarters before a failure), and the debt ratios (one quarter before a failure) or unadjusted economic value added (two, three and fourth quarters before a failure) is superior in predicting corporate failure in China.
Authors and Affiliations
Zhen Jia Liu*| PHD at School of Business ,Changzhou University, Changzhou City, Jiangsu Providence, China, Yi Shu Wang| Associate Professor at School of Business ,Changzhou University, Changzhou City, Jiangsu Providence, China
Keywords
Related Articles
- EP ID EP2247
- DOI -
- Views 613
- Downloads 42
CAUSALITY BETWEEN OIL CONSUMPTION AND ECONOMIC GROWTH IN OPEC COUNTRIES: A PANEL COINTEGRATION APPROACH
This paper examined the relationship between oil consumption and economic growth in OPEC countries within a panel cointegration and panel based error correction model by using data from 1980 – 2011. In this paper we use...
FIRM LEVEL JOB CREATION RATES OVER THE BUSINESS CYCLE
We study the evolution and cyclical dependence of the cross sectional distribution of firm level job creation rates from 1975 to 2004 for the Austrian private sector. The share of firms not adjusting has declined over ti...
TRANSACTION COSTS, MULTIPLE EQUILIBRIA, AND CURRENCY DEVALUATION
This paper attempts to examine the effect of a currency devaluation on domestic output by incorporating the Coase (1937) assertion into a standard open economy model. Our results show that there will be multiple equilibr...
ROBUST MONETARY POLICY IN AN UNCERTAIN ECONOMIC ENVIRONMENT: EVIDENCE FROM TUNISIAN ECONOMY
This paper tries to study the robust monetary policy in an uncertain economic environment. More precisely, our idea is to know how to conduct monetary policy in the case that the central bank does not correctly perceive...
THE SUSTAINABILITY OF EXTERNAL ADJUSTMENT PROCESS IN TUNISIA: LESSONS FOR POST “ARAB SPRING” REVOLUTION POLICIES
This paper highlights one of the first attempts in the empirical studies. It shall examine the sustainability of external adjustment policy using a quantitative approach. Using intertemporel and consistency approaches of...