Some Further Empirical Evidence on Predicting Private Company Failure

Abstract

Abstract Abstract A common feature of previous work on failure prediction models of UK companies is that the non-failed samples are restricted to include only sound or healthy companies. This may be considered a major weakness since, as a consequence, the models are biased in statistical design and have unclear relevance to a potential user. The major purpose of this paper is to develop models which explicitly allow for loss-making companies in the non-failed sample. We novelly experiment with rnultilogit analysis; we also report, as joint products of our analysis, some empirical results on the determinants of the going concern qualification, the time lag in reporting annual accounts and the formal type of legal failure.