Indicators of corporate default : an EU based empirical study
The present paper contributes to the research on the indicators that provide a warning of company failure by employing micro and macro variables within a framework of survival analysis using a sample of 0.4 million companies from the European Union (EU). The sensitivity of the results is checked using two complementary event definitions - bankruptcy and negative equity. Our results imply that the baseline hazard of a default is a U-shaped function of the time the company has survived. High leverage and a low return on assets appear to be strong predictors of failure. Macroeconomic variables give mixed evidence for old and new member states as well as for the two default definitions
|Date of creation:||04 Sep 2007|
|Date of revision:||04 Sep 2007|
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"Alternative methodologies in studies on business failure: do they produce better results than the classical statistical methods?,"
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium
04/249, Ghent University, Faculty of Economics and Business Administration.
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