A Review of Financial Distress Prediction Models: Logistic Regression and Multivariate Discriminant Analysis
Journal Title: Indian-Pacific Journal of Accounting and Finance - Year 2017, Vol 1, Issue 3
Abstract
In corporate finance, the early prediction of financial distress is considered more important as another occurrence of business risks. The study presents a review of literature for early prediction of financial bankruptcy. It contributes to the formation of a systematic review of the literature regarding previous studies done in the field of bankruptcy. It addresses two most commonly used financial distress prediction models, i.e. multivariate discriminant analysis and logit. Models are discussed with their advantages and disadvantages. After methodological review, it seems that logit regression model (LRM) is more advantageous than multivariate discriminant analysis (MDA) for better prediction of financial bankruptcy. However, accurate prediction of bankruptcy is beneficial to improve the regulation of companies, to form policies for companies and to take any precautionary measures if any crisis is about to come in future.
Authors and Affiliations
Ehsan ul Hassan, Zaemah Zainuddin, Sabariah Nordin
Preface to the Volume 2 Issue 4 of Indian-Pacific Journal of Accounting and Finance
I welcome you to the Volume 2 Issue 4 of Indian-Pacific Journal of Accounting and Finance (IPJAF). In this Issue 4, all the presentations are international research with emphasis on Islamic financing, entrepreneurship,...
Salaried Taxpayers’ Internal States and Assessment Performance Under Self-Assessment System
Malaysian individual tax system had evolved notably since its introduction in 1967. The first reform that impact all taxpayers was the implementation of self-assessment system (SAS) to replace the old assessment system i...
The Empirical Study on Market Liquidity and Determinants of Sukuk in Malaysia
The purpose of this study is to examine the relationship between market liquidity and the determinants of Sukuk in Malaysia’s perspective. This study is also to determine whether the Sukuk market is also reacting as simi...
An Investigation of Socially Sustainable Behaviour of Local Players in the Supply Chain of Shea Butter in Rural Borgu Nigeria: From a Role Theory Perspective
The Shea butter industry in Nigeria is fragmented, private-driven and less regulated. This paper explores the roles, practices, and behaviour of local supply chain stakeholders who mainly consist of rural women entrepren...
Examining the Livelihood Assets and Sustainable Livelihoods among the Vulnerability Groups in Malaysia
Until recently, the livelihood vulnerability group such as paddy farmers, coastal fishers and rubber tappers in rural areas are susceptible to economic shock and climate change such as flood and drought. This situation w...