Prediction of business failure: a comparison of discriminant and logistic regression analyses
This paper investigates two predictive models of business failure and important financial variables detecting failure potential using the sample of 122 both publicly opened and closed firms from the period of 1999-2007. Discriminant and Logistic Regression Analyses are performed and their predictive accuracy are compared. The results demonstrate that most of the failed firms show the signs of financial distress long before the failure and no statistically significant difference between the prediction results and variable choice of the discriminant and logistic regression analyses.
Business Failure;Failure Prediction;Discriminant Analysis;Logistic Regression Analysis;Financial Distress.