Business Demography in Poland: Microeconomic and Macroeconomic Determinants of Firm Survival
AbstractThe paper presents a model assigning a bankruptcy probability to a company, developed on the basis of individual data from balance sheets and income statements of Polish companies, collected by Central Statistical Office of Poland in the 2001 – 2010 period. Determinants for warning signals for bankruptcies were examined together with the possibilities of early identification of such signals. The research was based on a logistic regression performed on categorized variables transformed using a weight of evidence approach. Scoring methods were used to create an indicator for grading the companies in the case of bankruptcies. In the forecasting model of a possible bankruptcy in a year's horizon the highest weight was assigned to the indicator for the ability to cover financial costs which explained the company's ability to meet the interest payments and capital costs. Indebtedness, share of cash reserves in assets and sales’ revenues were considered in forecasting bankruptcies information regarding liquidity. Taking into account the direction of sales, the specialized exporters were least probable to go bankrupt. In the more generalized model which accounts for the macroeconomic situation the most important was the indicator for the ability to pay off debt. In the model forecasting bankruptcies three-years in advance - the early warning model - no dominant indicator was found. Weights of 20% were assigned to the indicators of liquidity, current assets turnover and the return on sales.
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Bibliographic InfoPaper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number 2013-08.
Length: 25 pages
Date of creation: 2013
Date of revision:
firm survival; micro-data; Polish companies; scoring methods;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-30 (All new papers)
- NEP-BEC-2013-03-30 (Business Economics)
- NEP-ENT-2013-03-30 (Entrepreneurship)
- NEP-FOR-2013-03-30 (Forecasting)
- NEP-TRA-2013-03-30 (Transition Economics)
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