Bankruptcy Prediction in Emerging Economies: Use of a Mixed Logistic Model
DOI:
https://doi.org/10.46661/revmetodoscuanteconempresa.2187Keywords:
Modelo logístico mixto, estados contables, ratios financieros, crisis financiera, predicción de quiebra, Argentina, mixed logistic model, financial statements, accounting ratios, financial distress, bankruptcy predictionAbstract
This study is a replication and adaptation of Jones and Hensher (2004) model in an emerging economy with the purpose of testing its eternal validity. It compares the logistic standard model's performance with the logistic mixed model to predict bankruptcy risk of Argentinean companies between 1993-2000 by using financial statements and ratios defined in previous studies by Altman and Jones and Hensher. Similar to previous studies, profitability, asset turnover, debt and cash flow from operations explain financial distress' probability. The main contribution of this new methodology is the important reduction of error type I to the 9 %. This study asserts that the logistic mixed model, that considers the effect of non-observed heterogeneity, significantly improves the performance of the logistic standard model.
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