Failure prediction from the investors’ view by using financial ratios. Lesson from Romania

dc.contributor.authorAchim, Monica Violeta
dc.contributor.authorBorlea, Sorin Nicolae
dc.contributor.authorGăban, Lucian Vasile
dc.contributor.otherEkonomická fakultacs
dc.date.accessioned2016-12-05
dc.date.available2016-12-05
dc.date.issued2016-12-05
dc.description.abstractThe purpose of our study is to identify which financial indicators have a significant impact on the probability of Romanian companies’ bankruptcy risk from the investors’ point of view by studying the impact on the probability of shares delisting from the stock exchange. The research is conducted on a sample of 16 failed and 21 non-failed non-financial companies listed on the Bucharest Stock Exchange between 2002 and 2012. The Logit analysis is used for identifying the variables that are significant and have predictive power on distress likelihood. By using 12 main financial ratios, we estimate three alternative Logit models for determining their signs, significance, predictive power, efficiency of fit tests. The first model provides the highest explanatory power. Three variables such as Flexibility ratio (FLEX), Assets turnover (ASTU) and Current assets turnover (CASTU) are found to be significant determinants for stock exchange delisting. These three variables provide 52.59% of correct prediction of bankruptcy risk. The percentage for correctly classified observations for the fitted Logit model is of 83.33%. Moreover, this research attempts to reveal the changes that may appear among bankruptcy predictors given that the bankruptcy risk model is developed from the investors’ point of view and not from that of a simple decision-making person. For a stock market investor, bankruptcy already starts at the stage of delisting the company because the investment was strongly compromised, whether or it continues its activity or not. Orientation towards investors when predicting bankruptcy risk is the main element of originality that our research adds to the scientific achievements in bankruptcy, until this moment.en
dc.format.extent117-133 s.cs
dc.identifier.doi10.15240/tul/001/2016-4-009
dc.identifier.eissn2336-5604
dc.identifier.issn1212-3609
dc.identifier.urihttps://dspace.tul.cz/handle/15240/19273
dc.language.isoen
dc.publisherTechnická Univerzita v Libercics
dc.publisherTechnical university of Liberec, Czech Republicen
dc.publisher.abbreviationTUL
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dc.relation.ispartofEkonomie a Managementcs
dc.relation.ispartofEconomics and Managementen
dc.relation.isrefereedtrue
dc.rightsCC BY-NC
dc.subjectdelistingen
dc.subjectfailure predictionen
dc.subjectfinancial ratiosen
dc.subjectLogit modelen
dc.subject.classificationC25
dc.subject.classificationC52
dc.subject.classificationG33
dc.titleFailure prediction from the investors’ view by using financial ratios. Lesson from Romaniaen
dc.typeArticleen
local.accessopen
local.citation.epage133
local.citation.spage117
local.facultyFaculty of Economics
local.fulltextyes
local.relation.abbreviationE&Men
local.relation.abbreviationE+Mcs
local.relation.issue4
local.relation.volume19
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