Are the Financial Bankruptcy Predictors Branch’s Specific? The Evidence from the Czech Manufacturing and Agriculture Companies

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216305%3A26510%2F15%3APU115937" target="_blank" >RIV/00216305:26510/15:PU115937 - isvavai.cz</a>

Result on the web

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DOI - Digital Object Identifier

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Result language

angličtina

Original language name

Are the Financial Bankruptcy Predictors Branch’s Specific? The Evidence from the Czech Manufacturing and Agriculture Companies

Original language description

Bankruptcy of a company causes a significant loses to owners and other stakeholders. Many scientific efforts have been dedicated to creating a more accurate model by to analyzing different sets of predictors (variables of the model) or a different set of methods. Previous work showed that these models are less effective in application in alternative branch, period or economic environment than that from which the data on which they were developed was taken often. Most of the previous works analyse the mentioned problems on the sample of manufacturing firms; there is a limited attention paid to other branches. The aim of this paper is to analyse the significance of a set of financial ratios in different time periods and two branches. The sample under investigation is comprised of 43,515 companies in agriculture and manufacturing. There are 42,989 active (or financially healthy companies) and 526 bankrupt companies (a year before bankruptcy). We tested a set of 16 financial ratios covering several aspects of company’s financial health, mentioned in previous studies on company’s bankruptcy prediction. Financial ratios were defined for each analysed company in the sample of active and in the sample of bankrupt companies. The ratios were calculated according to status of the company (i.e. active or bankrupt), the last reported year (2008, 2009,..., 2013), i.e. in case of bankrupt companies the year of bankruptcy and finally according to the number of years prior bankruptcy (t+1, t+2, ...,t+5). The F-test and t-test were applied to test the potential differences between financial ratios of the samples of active and bankrupt companies and the p-values of these tests were analysed. We found that three ratios (working capital to total assets, earning before interests and tax to total assets and current liabilities to total assets) are time specific in the branch of manufacturing.

Czech name

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Czech description

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Type

D - Article in proceedings

CEP classification

AE - Management, administration and clerical work

OECD FORD branch

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Project

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Continuities

S - Specificky vyzkum na vysokych skolach

Publication year

2015

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection

X. International Conference on Applied Business Research

ISBN

978-80-7509-379-0

ISSN

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e-ISSN

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Number of pages

19

Pages from-to

850-869

Publisher name

Mendel University in Brno

Place of publication

Madrid, Spain

Event location

Madrid

Event date

Sep 14, 2015

Type of event by nationality

WRD - Celosvětová akce

UT code for WoS article

000389581500083