search query: @indexterm company failures / total: 200
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Author: | Lau, A. H. L. |
Title: | A five-state financial distress prediction model. |
Journal: | Journal of Accounting Research
1987 : SPRING, VOL. 25:1, p. 127-138 |
Index terms: | COMPANY FAILURES BUSINESS FORECASTING FINANCIAL MODELS |
Language: | eng |
Abstract: | The model extends previous corporate failure models in two ways: (i) five financial states are used to approximate the continuum of corporate financial health (instead of the traditional failing/nonfailing distinction) and (ii) the model estimates the probability that a firm enters each of the five states (rather than "classifying" it to a certain financial state). The ranked probability scoring rule is used to evaluate the quality of the mentioned probabilistic predictions. The two extensions provide a better approximation to the reality. |
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