TY - JOUR

T1 - Predicting Corporate Failure - Some Results for the U.K. Corporate Sector

AU - Peel, M.J.

AU - Peel, David

AU - Pope, Peter

PY - 1986

Y1 - 1986

N2 - A large number of authors have developed statistical models, which are based solely on conventional financial ratios constructed from published accounting data, with the aim of predicting corporate failure as evidenced by the event of ‘bankruptcy’. The purpose of this paper is to report some empirical results for a study of the UK corporate sector in which corporate failure is predicted employing a statistical model which incorporates both conventional accounting ratios and a number of new variables which are not derived from profit and loss accounts and balance sheet items, but which are computed from annual company reports and accounts. The empirical results suggesting that our new variables enhance the predictive power of models which employ conventional financial ratios only.

AB - A large number of authors have developed statistical models, which are based solely on conventional financial ratios constructed from published accounting data, with the aim of predicting corporate failure as evidenced by the event of ‘bankruptcy’. The purpose of this paper is to report some empirical results for a study of the UK corporate sector in which corporate failure is predicted employing a statistical model which incorporates both conventional accounting ratios and a number of new variables which are not derived from profit and loss accounts and balance sheet items, but which are computed from annual company reports and accounts. The empirical results suggesting that our new variables enhance the predictive power of models which employ conventional financial ratios only.

U2 - 10.1016/0305-0483(86)90003-4

DO - 10.1016/0305-0483(86)90003-4

M3 - Journal article

VL - 14

SP - 5

EP - 12

JO - Omega: The International Journal of Management Science

JF - Omega: The International Journal of Management Science

SN - 0305-0483

IS - 1

ER -