Predicting financial distress in Greek business : a viability factors perspective
Part of : MIBES Transactions : international journal ; Vol.5, No.2, 2011, pages 158-170
Issue:
Pages:
158-170
Abstract:
The motivation of this study is to approach the issue of financial distress signalling within an alternative conceptual framework. We develop an accounting-based model for the prediction of financial distress with Greek business data from a viability factors perspective. One of the main objectives of this study is to provide evidence about the prediction of financial distress in a way to guide managerial action towards the adoption of strategic policies that enhance the financial viability of companies. The present study incorporates multiple discriminant analysis and logit analysis for the construction of a model for the prediction of financial distress. The paper provides evidence in support of the existing traditional prediction models vis-à-vis liquidity and corporate structure and acknowledges the contribution of human capital to company's profitability and sales growth as critical success factors for the viability of Greek business. The empirical results of the study indicate that the logit model outperforms the MDA model in terms of correct classification and Type I error. The contribution of this paper is the proposition of new value-relevant variables concerning the activity, the profitability and the dividend policy of Greek business that enhance the accuracy of the existing financial distress prediction models.
Subject:
Subject (LC):
Keywords:
financial distress, prediction models, viability, bankruptcy
Notes:
Περιέχει πίνακες και βιβλιογραφία, JEL classifications: G32, G33, M21, M41
