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The Ooghe-Joos-De Vos failure prediction models: a cross-industry validation

Author

Listed:
  • Hubert Ooghe
  • Jan Camerlynck
  • Sofie Balcaen

    (Vlerick Leuven Gent Management School)

Abstract

This study tests the validity of the Belgian Ooghe-Joos-De Vos (1991) failure prediction models (1 and 3 years prior to failure) across 18 different industries and different size classes. Firstly, the performance results and the trade-off functions reveal a wide range of performances for the different industries. However, we notice that the OJD models perform best for the classical manufacturing industries and financial services, while they show the worst performance results for the service industries and the no-industry category. Furthermore, when using new, industry specific cut-off points, the error rates of the models are significantly reduced. Secondly, the OJD model 1 year prior to failure seems to perform best for large companies and companies with complete form annual accounts. Finally, the performance differences between the various subgroups with respect to industry, size class and form of annual account of the model 3 years prior to failure the are much smaller than those of the model 1 year prior to failure.

Suggested Citation

  • Hubert Ooghe & Jan Camerlynck & Sofie Balcaen, 2002. "The Ooghe-Joos-De Vos failure prediction models: a cross-industry validation," Vlerick Leuven Gent Management School Working Paper Series 2001-9, Vlerick Leuven Gent Management School.
    • Handle: RePEc:vlg:vlgwps:2001-9
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    Cited by:

    1. D. Van den Poel, 2003. "Predicting Mail-Order Repeat Buying. Which Variables Matter?," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(3), pages 371-404.
    2. DE CLEYN, Sven & BRAET, Johan, 2006. "The evolution and performance of spin-off ventures: Integration and elaboration of existing models," Working Papers 2006031, University of Antwerp, Faculty of Business and Economics.
    3. Balcaen, Sofie & Ooghe, Hubert, 2006. "35 years of studies on business failure: an overview of the classic statistical methodologies and their related problems," The British Accounting Review, Elsevier, vol. 38(1), pages 63-93.

    More about this item

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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