Predicting corporate financial distress using logistic regression : Malaysian evidence / Tew You Hoo and Enylina Nordin

Tew, You Hoo and Nordin, Enylina (2006) Predicting corporate financial distress using logistic regression : Malaysian evidence / Tew You Hoo and Enylina Nordin. Social and Management Research Journal (SMRJ), 3 (1). pp. 123-132. ISSN 1675-7017

Abstract

This study attempts to construct and test financial distress prediction model for Malaysian Companies. The samplefor this study consists of84 companies listed on Bursa Malaysia that became financially distressed in 200/ and 2002 and a matched (by industry and firm size) sample 0/ 84 financially healthy companies. The model is constructed by employing logistic regression analysis based on pooled data of5 years prior tofinancial distress. The model isfirst derived using the estimation sample andthen tested using the validation sample. Adding to the existing research onfinancial distress prediction models, the current model utilizes measures ofshareholders' equity to total liabilities, shareholders' equity to total assets, current liabilities to total assets, total borrowings to total assets andinventory turnover. The results are encouraging, as the model developed/or predicting corporatefinancial distress in Malaysia is reliable up to 5 years prior to financial distress. II is also believed thai the prediction model can be useful to different groups of users such as policy makers, financial institutions, creditors, managers, bankers, investors and shareholders.

Metadata

Item Type: Article
Creators:
Creators
Email / ID Num.
Tew, You Hoo
youho0359@salam.uitm.edu.my
Nordin, Enylina
UNSPECIFIED
Subjects: H Social Sciences > HG Finance > Financial management. Business finance. Corporation finance
H Social Sciences > HG Finance > Investment, capital formation, speculation > Stock exchanges. Insider trading in securities > Malaysia
Divisions:
Journal or Publication Title: Social and Management Research Journal (SMRJ)
UiTM Journal Collections: UiTM Journal > Social and Management Research Journal (SMRJ)
ISSN: 1675-7017
Volume: 3
Number: 1
Page Range: pp. 123-132
Date: 2006
URI: https://ir.uitm.edu.my/id/eprint/12978
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12978

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