China＇s capital market is different from that of the US in economic, political, and socio-cultural ways. China＇s dynamic and fast growing economy for the past decade entails some structural changes and weaknesses an...China＇s capital market is different from that of the US in economic, political, and socio-cultural ways. China＇s dynamic and fast growing economy for the past decade entails some structural changes and weaknesses and as a consequence, there are some business failures. We propose bankruptcy prediction models using Chinese firm data via several data mining tools and traditional logit analysis. We used Chinese firm data one year prior to bankruptcy and our results suggest that the financial variables developed by Altman （1968） and Ohlson （1980） perform reasonably well in determining business failures of Chinese firms, but the overall prediction rate is low compared with those of the US or other countries＇ studies. The reasons for this low prediction rate may be structural weaknesses resulting from China＇s fast growth and immature capital market.展开更多
The problem of the firm bankruptcy prediction was investigated by foreign researchers in the 1930s and it still remains relevant. Since the publishing of Altman＇s （1968） major work, based on multiple discriminant a...The problem of the firm bankruptcy prediction was investigated by foreign researchers in the 1930s and it still remains relevant. Since the publishing of Altman＇s （1968） major work, based on multiple discriminant analysis （MDA）, this methodological area has considerably changed. Taking into consideration that new data have appeared in the course of time, companies＇ average size has changed, and the accounting standards have changed （Altman, Haldeman, ＆ Narayanan, 1977）, methods and models should be renewed so as to be appropriate for current situation. The purpose of this paper1 is to reveal factors causing bankruptcy and use models appropriate for prediction bankruptcy in the area of a construction industry during the financial crisis. This investigation has been carried out on the basis of logit and probit analysis. The main reasons of bankruptcy revealed in the course of this investigation are the following： （1） non-optimal capital structure formation; （2） ineffective liquidity management; （3） decrease in assets profitability; and （4） decrease in short-term assets turnover. The most reliable indicators which give warning of bankruptcy ahead of others are financial instability and liquidity ratios.展开更多
文摘China＇s capital market is different from that of the US in economic, political, and socio-cultural ways. China＇s dynamic and fast growing economy for the past decade entails some structural changes and weaknesses and as a consequence, there are some business failures. We propose bankruptcy prediction models using Chinese firm data via several data mining tools and traditional logit analysis. We used Chinese firm data one year prior to bankruptcy and our results suggest that the financial variables developed by Altman （1968） and Ohlson （1980） perform reasonably well in determining business failures of Chinese firms, but the overall prediction rate is low compared with those of the US or other countries＇ studies. The reasons for this low prediction rate may be structural weaknesses resulting from China＇s fast growth and immature capital market.
文摘The problem of the firm bankruptcy prediction was investigated by foreign researchers in the 1930s and it still remains relevant. Since the publishing of Altman＇s （1968） major work, based on multiple discriminant analysis （MDA）, this methodological area has considerably changed. Taking into consideration that new data have appeared in the course of time, companies＇ average size has changed, and the accounting standards have changed （Altman, Haldeman, ＆ Narayanan, 1977）, methods and models should be renewed so as to be appropriate for current situation. The purpose of this paper1 is to reveal factors causing bankruptcy and use models appropriate for prediction bankruptcy in the area of a construction industry during the financial crisis. This investigation has been carried out on the basis of logit and probit analysis. The main reasons of bankruptcy revealed in the course of this investigation are the following： （1） non-optimal capital structure formation; （2） ineffective liquidity management; （3） decrease in assets profitability; and （4） decrease in short-term assets turnover. The most reliable indicators which give warning of bankruptcy ahead of others are financial instability and liquidity ratios.
