Development of a financial health indicator based on companies’ annual accounts
AbstractThis document describes the development of a financial health indicator based on companies' financial statements. This indicator is conceived as a weighted combination of variables, which is obtained through a model discriminating between failing firms and non-failing firms. The definition of failure is based on a legal criterion, namely that a company is considered to have failed if it has faced bankruptcy or judicial administration in the past. Based on the model results, companies are positioned in financial health classes, which are intended to be included in the "company files" designed by the Central Balance Sheet Office.
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Bibliographic InfoPaper provided by National Bank of Belgium in its series Working Paper Document with number 213.
Length: 92 pages
Date of creation: Apr 2011
Date of revision:
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Corporate failure; logistic regression; micro-data; financial statements;
Find related papers by JEL classification:
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
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- Costeiu, Adrian & Neagu, Florian, 2013. "Bridging the banking sector with the real economy: a financial stability perspective," Working Paper Series 1592, European Central Bank.
- Claude Mathys, 2012. "Economic importance of the Belgian ports: Flemish maritime ports, Liège port complex and the port of Brussels – Report 2010," Working Paper Document 225, National Bank of Belgium.
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