Identifying unsound firms in Italy: An attempt to use trend variables

doi:10.1016/0378-4266(84)90007-4

Journal of Banking & Finance

Volume 8, Issue 2, June 1984, Pages 269-279

https://doi.org/10.1016/0378-4266(84)90007-4 Get rights and content

Abstract

The aims of the present study are (i) to develop a predictive model, using discriminant analysis to forecast the solvency of Italian firms and (ii) to compare the ability of this model with that of a second one in which static ratios have been replaced by values that take account of their own trends. The results obtained by considering the trends of ratios over three years are encouraging and indicate that the second model not only performed better than the first, but also better than any other model using the balance sheet data of Italian firms.

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^☆: This article reports the main points and results of a study which is a revised version of the author's MA thesis (1982). Special thanks are due to Alison M. Kerruish (UCNW Bangor - U.K.), Marco Onado (Universita di Modena — Italy) and Ignazio Visco (Research Department of the Bank of Italy) for their helpful comments on the original work.

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Identifying unsound firms in Italy: An attempt to use trend variables☆

Abstract

Journal of Banking and Finance

Analisi dei bilanci e previsione delle insolvenze

Collana del Comitato Direttivo degli Agenti di Cambio della Borsa Valori di Milano

Financial ratios, discriminant analysis and the prediction of corporate bankruptcy

Journal of Finance

Railroad bankruptcy propensity

The Journal of Finance

Predicting railroad bankruptcy in America

Bell Journal of Economics and Management Science

Predicting performance in the savings and loan association industry

Journal of Monetary Economics

Corporate financial distress

Corporate collapse: the causes and symptoms

Empirical research in accounting: Selected studies

Journal of Accounting Research