A Comparative Study of Australian and Korean Accounting Data in Business Failure Prediction Models
AbstractThe purpose of this paper is to evaluate comparability of Australian and Korean accounting data in their predictive power and usefulness in business failure prediction models. To this end, the predictive ability of total 52 individual financial ratios is assessed for the sample from each country, along with three different significance tests (univariate approach). In addition, four alternative multivariate models, i.e., linear discriminant model, quadratic discriminant model, logit model, and probit model, are also constructed (multivariate approach). The classification results from each multivariate model are then compared to assess the robustness of our findings. Main findings are: (i) in most cases, Australian financial ratios have more information content than their Korean counterparts in failure prediction; (ii) ROE (return on equity), NI/TTA (Total Liabilities/Total Tangible Assets), CF/INT (Cash Flow/Interests) are the most efficient and inter temporally stable univariate discriminators for the Australian case and EBIT/INT (Earnings before Interest and Taxes/Interests), RE/TTA (Retained Earnings/Total Tangible Assets) for the Korean case; (iii) compared with the results from an univariate approach, the multivariate approach in the Australian case made only marginal improvement of prediction accuracy, while the Korean multivariate models increased their prediction accuracy significantly.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by School of Economics, La Trobe University in its series Working Papers with number 1999.07.
Length: 20 pages
Date of creation: 1999
Date of revision:
Accounting; Economic Models; Measuring Instruments EDIRC Provider-Institution: RePEc:edi:smlatau;
Other versions of this item:
- Young-Won Her & Chongwoo Choe, 1999. "A Comparative Study of Australian and Korean Accounting Data in Business Failure Prediction Models," Working Papers 1999.07, School of Economics, La Trobe University.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Shuk-Wern Ong & Voon Choong Yap & Roy W.L. Khong, 2011. "Corporate failure prediction: a study of public listed companies in Malaysia," Managerial Finance, Emerald Group Publishing, vol. 37(6), pages 553-564, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephen Scoglio).
If references are entirely missing, you can add them using this form.