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Bankruptcy predictions for U.S. air carrier operations: a study of financial data

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  • Chiuling Lu
  • Ann Yang
  • Jui-Feng Huang

Abstract

We applied the binary quantile regression, a Bayesian quantile regression, and logit models to identify optimal bankruptcy prediction accuracy for U.S. air carriers for the period from 1990 to 2011. We used accuracy ratio and Brier scores as standards of comparison and a Bayesian binary quantile regression with optimal bankruptcy prediction accuracy for both healthy and bankrupt air carriers. Total assets positively and significantly influenced bankruptcy probability for air carriers. Operational variables consisted of quick assets to expenditures for operation, increase in sales, and working capital to assets; however, these variables negatively and significantly influenced air carriers’ bankruptcy probability. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Chiuling Lu & Ann Yang & Jui-Feng Huang, 2015. "Bankruptcy predictions for U.S. air carrier operations: a study of financial data," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(3), pages 574-589, July.
    • Handle: RePEc:spr:jecfin:v:39:y:2015:i:3:p:574-589
    DOI: 10.1007/s12197-014-9282-6
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    Cited by:

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    2. Mahtani, Umesh S. & Garg, Chandra Prakash, 2018. "An analysis of key factors of financial distress in airline companies in India using fuzzy AHP framework," Transportation Research Part A: Policy and Practice, Elsevier, vol. 117(C), pages 87-102.
    3. Yang, Ann Shawing & Baasandorj, Suvd, 2017. "Exploring CSR and financial performance of full-service and low-cost air carriers," Finance Research Letters, Elsevier, vol. 23(C), pages 291-299.

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    More about this item

    Keywords

    Air carrier industry; Bankruptcy prediction; Binary quantile regression; G33; L93; C11;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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