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Using financial ratios to identify Romanian distressed companies

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Author Info
ANDREICA Madalina Ecaterina () (The Bucharest Academy of Economic Studies, Romania)
ANDREICA Mugurel Ionut () (Politehnica University, Bucharest, Romania)
ANDREICA Marin () (The Bucharest Academy of Economic Studies, Romania)
Abstract

In the context of the current financial crisis, when more companies are facing bankruptcy or insolvency, the paper aims to find methods to identify distressed firms by using financial ratios. The study will focus on identifying a group of Romanian listed companies, for which financial data for the year 2008 were available. For each company a set of 14 financial indicators was calculated and then used in a principal component analysis, followed by a cluster analysis, a logit model, and a CHAID classification tree.

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Publisher Info
Article provided by Faculty of Management, Academy of Economic Studies, Bucharest, Romania in its journal ECONOMIA seria MANAGEMENT / ECONOMY - MANAGEMENT series.

Volume (Year): 12 (2009)
Issue (Month): 1 Special (July)
Pages: 46-55
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Handle: RePEc:rom:econmn:v:12:y:2009:i:1special:p:46-55

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Web page: http://www.management.ase.ro/
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Related research
Keywords: distress company; financial ratio; cluster; CHAID; logit model;

Find related papers by JEL classification:
G01 - Financial Economics - - General - - - Financial Crises
G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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  1. Scott, James, 1981. "The probability of bankruptcy: A comparison of empirical predictions and theoretical models," Journal of Banking & Finance, Elsevier, vol. 5(3), pages 317-344, September. [Downloadable!] (restricted)
  2. Eisenbeis, Robert A, 1977. "Pitfalls in the Application of Discriminant Analysis in Business, Finance, and Economics," Journal of Finance, American Finance Association, vol. 32(3), pages 875-900, June. [Downloadable!] (restricted)
  3. Shumway, Tyler, 2001. "Forecasting Bankruptcy More Accurately: A Simple Hazard Model," Journal of Business, University of Chicago Press, vol. 74(1), pages 101-24, January. [Downloadable!] (restricted)
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This page was last updated on 2009-11-26.


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