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The bankruptcy risk matrix as a tool for interpreting the outcome of bankruptcy prediction models

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  • Lohmann, Christian
  • Möllenhoff, Steffen

Abstract

The study introduces the bankruptcy risk matrix. The bankruptcy risk matrix allows for a more precise identification of financially distressed companies and a more accurate interpretation of the outcome of bankruptcy prediction models as it takes into account the changes in bankruptcy predictions. Furthermore, the study applies the bankruptcy risk matrix on most recent bankruptcy risk data on listed US companies.

Suggested Citation

  • Lohmann, Christian & Möllenhoff, Steffen, 2023. "The bankruptcy risk matrix as a tool for interpreting the outcome of bankruptcy prediction models," Finance Research Letters, Elsevier, vol. 55(PA).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002234
    DOI: 10.1016/j.frl.2023.103851
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    References listed on IDEAS

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    1. John Y. Campbell & Jens Hilscher & Jan Szilagyi, 2008. "In Search of Distress Risk," Journal of Finance, American Finance Association, vol. 63(6), pages 2899-2939, December.
    2. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    3. Stewart Jones, 2017. "Corporate bankruptcy prediction: a high dimensional analysis," Review of Accounting Studies, Springer, vol. 22(3), pages 1366-1422, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bankruptcy prediction; Bankruptcy risk matrix; US companies;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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