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Multivariate Model For Corporate Bankruptcy Prediction In Romania

Author

Listed:
  • Daniel BRÎNDESCU – OLARIU

    (West University of Timisoara)

Abstract

The current paper proposes a methodology for bankruptcy prediction applicable for Romanian companies. Low bankruptcy frequencies registered in the past have limited the importance of bankruptcy prediction in Romania. The changes in the economic environment brought by the economic crisis, as well as by the entrance in the European Union, make the availability of performing bankruptcy assessment tools more important than ever before. The proposed methodology is centred on a multivariate model, developed through discriminant analysis. Financial ratios are employed as explanatory variables within the model. The study has included 53,252 yearly financial statements from the period 2007 – 2010, with the state of the companies being monitored until the end of 2012. It thus employs the largest sample ever used in Romanian research in the field of bankruptcy prediction, not targeting high levels of accuracy over isolated samples, but reliability and ease of use over the entire population.

Suggested Citation

  • Daniel BRÎNDESCU – OLARIU, 2016. "Multivariate Model For Corporate Bankruptcy Prediction In Romania," Network Intelligence Studies, Romanian Foundation for Business Intelligence, Editorial Department, issue 7, pages 69-83, June.
    • Handle: RePEc:cmj:networ:y:2016:i:7:p:69-83
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    References listed on IDEAS

    as
    1. Daniel BRÎNDESCU – OLARIU, 2014. "The Potential Of The Equity Working Capital In The Prediction Of Bankruptcy," Management Intercultural, Romanian Foundation for Business Intelligence, Editorial Department, issue 31, pages 25-32, November.
    2. Daniel BRÎNDESCU – OLARIU, 2014. "Payment Capacity Sensitivity Factors," Management Intercultural, Romanian Foundation for Business Intelligence, Editorial Department, issue 31, pages 33-40, November.
    3. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    4. Ohlson, Ja, 1980. "Financial Ratios And The Probabilistic Prediction Of Bankruptcy," Journal of Accounting Research, Wiley Blackwell, vol. 18(1), pages 109-131.
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    Citations

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    Cited by:

    1. BEBEȘELEA, Mihaela & PATACHE, Laura, 2019. "Exploring The Relationship Between Accounting And Statistics," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 19(3), pages 55-64.
    2. Daniel Brîndescu Olariu, 2016. "Bankruptcy Prediction Based on the Autonomy Ratio," EuroEconomica, Danubius University of Galati, issue 2(35), pages 78-92, November.

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    More about this item

    Keywords

    Discriminant analysis; Risk; Failure; Financial ratios; Classification accuracy; Benchmark;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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