Bankruptcy prediction and homogeneity of firm samples: The case of Greece.
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Arnis, Nikolaos
Chytis, Evangelos
Kolias, Georgios
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Academic journals
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peer-reviewed
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Journal of Accounting and Taxation
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This paper explores the prediction of bankruptcy of Greek retail and wholesale trade companies and, in
particular, the relation between the forecasting ability of the Logit model and the degree of homogeneity
of the samples of bankrupt and healthy companies. A sample of 119 bankrupt companies was matched
with an equal sample of healthy companies for the period 2003-2014, based on year, sector, and subsector,
which was formed by random selection. Using the method of factor analysis, seven financial
ratios were selected, which are the independent variables of the model. Applying the Logit model, the
results showed a significant explanatory capability of the model in the trade sector as a whole as well
as in the wholesale trade sub-sectors, which increases as the homogeneity of samples of bankrupt and
healthy companies increases.In particular, the predictive capability of the model that we used improved
by 14.3% regarding the classification of bankrupt firms when the same methodology was applied from
the broader sector to the sub-sector. Moreover, the independent variable of capital structure has the
highest stability and contributes substantially to the discriminant validity of the Logit model.
Description
Keywords
Corporate bankruptcy, Sectoral forecasting models, Financial and accounting ratios
Subject classification
Bankruptcy
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en
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Πανεπιστήμιο Ιωαννίνων. Σχολή Οικονομικών και Διοικητικών Επιστημών.Τμήμα Λογιστικής & Χρηματοοικονομικής.
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Reference: 124-125
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Except where otherwised noted, this item's license is described as Attribution-NonCommercial-NoDerivs 3.0 United States