[Journal:] Revista de Métodos Cuantitativos para la Economía y la Empresa [ISSN:] 1886-516X [Volume:] 16 [Year:] 2013 [Pages:] 200-215
This study is a replication and adaptation of Jones and Hensher (2004) model in an emerging economy with the purpose of testing its eternal validity. It compares the logistic standard model's performance with the logistic mixed model to predict bankruptcy risk of Argentinean companies between 1993-2000 by using financial statements and ratios defined in previous studies by Altman and Jones and Hensher. Similar to previous studies, profitability, asset turnover, debt and cash ow from operations explain financial distress' probability. The main contribution of this new methodology is the important reduction of error type I to the 9 %. This study asserts that the logistic mixed model, that considers the effect of non-observed heterogeneity, significantly improves the performance of the logistic standard model.
mixed logistic model financial statements accounting ratios financial distress bankruptcy prediction Argentina