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Corporate Failure:A Non Parametric Method

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  • Ben Jabeur Sami

    (IESEG School of Management, France)

Abstract

A number of authors suggested that the impact of the macroeconomic factors on the incidence of the financial distress, and afterward in case of failure of companies. However, macroeconomic factors rarely, if ever, appear as variables in predictive models that seek to identify distress and failure; modellers generally suggest that the impact of macroeconomic factors has already been taken into accountby financial ratio variables. This article presents a systematic study of this domain, by examining the link between the failure of companies and macroeconomic factors for theFrench companies to identify the most important variables and to estimate their utility in a predictive context.The results of the study suggest that several macroeconomic variables are strictly associated to the failure, and have a predictive value by specifying the relation between the financial distress and the failure.

Suggested Citation

  • Ben Jabeur Sami, 2013. "Corporate Failure:A Non Parametric Method," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 2(3), pages 103-110, July.
    • Handle: RePEc:rbs:ijfbss:v:2:y:2013:i:3:p:103-110
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial Distress; Macroeconomic Variable; Partial Least Squares (Pls);
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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