Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs
Autor(a) principal: | |
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Data de Publicação: | 2022 |
Outros Autores: | , , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/11328/4411 |
Resumo: | This paper aims to develop a model for predicting corporate bankruptcy for SMEs in the Portuguese manufacturing industry where this question remains rather unaddressed. Using profitability, activity, liquidity, leverage, and solvency ratios, it was added the size and age variables, for a group of 208 firms, including 49 bankrupt firms and 159 active firms, during the years 2011 to 2015. The logit model allowed us to estimate a model with 82.3% of predictive capacity. The most important variables identified were profitability, solvency, and size. Estimations only with the data closest to the bankruptcy date improved predictive capacity. It is evidenced that financial and non-financial variables can predict bankruptcy probability. A possible future approach would be to analyze a larger sample. Also, a larger period could be considered, allowing to test either the effects of the 2007/8 crisis or the effects of the recent economic turmoil related to Covid-19. Important for both corporate managers and investors. Conclusions may be disclosed regarding the influence that economic turmoil certainly has on corporate defaults and bankruptcies allowing its extension to other countries. The contribution of this paper is to find the best specification for a bankruptcy prediction model applied to the Portuguese manufacturing industry SMEs. This paper also contributes to the existing literature by using non-financial variables and analyzing a sector still unexplored in Portugal, albeit its conclusions can be extended to other countries. |
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Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEsBankruptcyManufacturing industrySMEsLogitFinancial ratiosThis paper aims to develop a model for predicting corporate bankruptcy for SMEs in the Portuguese manufacturing industry where this question remains rather unaddressed. Using profitability, activity, liquidity, leverage, and solvency ratios, it was added the size and age variables, for a group of 208 firms, including 49 bankrupt firms and 159 active firms, during the years 2011 to 2015. The logit model allowed us to estimate a model with 82.3% of predictive capacity. The most important variables identified were profitability, solvency, and size. Estimations only with the data closest to the bankruptcy date improved predictive capacity. It is evidenced that financial and non-financial variables can predict bankruptcy probability. A possible future approach would be to analyze a larger sample. Also, a larger period could be considered, allowing to test either the effects of the 2007/8 crisis or the effects of the recent economic turmoil related to Covid-19. Important for both corporate managers and investors. Conclusions may be disclosed regarding the influence that economic turmoil certainly has on corporate defaults and bankruptcies allowing its extension to other countries. The contribution of this paper is to find the best specification for a bankruptcy prediction model applied to the Portuguese manufacturing industry SMEs. This paper also contributes to the existing literature by using non-financial variables and analyzing a sector still unexplored in Portugal, albeit its conclusions can be extended to other countries.2022-08-12T15:12:20Z2022-08-01T00:00:00Z2022-08info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/11328/4411eng1511-6670https://doi.org/10.33736/ijbs.4863.2022Pacheco, Luís MiguelMadaleno, MaraCorreia, PedroMaldonado, Isabelinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-06-15T02:13:04ZPortal AgregadorONG |
dc.title.none.fl_str_mv |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs |
title |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs |
spellingShingle |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs Pacheco, Luís Miguel Bankruptcy Manufacturing industry SMEs Logit Financial ratios |
title_short |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs |
title_full |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs |
title_fullStr |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs |
title_full_unstemmed |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs |
title_sort |
Probability of Corporate Bankruptcy: Application to Portuguese Manufacturing Industry SMEs |
author |
Pacheco, Luís Miguel |
author_facet |
Pacheco, Luís Miguel Madaleno, Mara Correia, Pedro Maldonado, Isabel |
author_role |
author |
author2 |
Madaleno, Mara Correia, Pedro Maldonado, Isabel |
author2_role |
author author author |
dc.contributor.author.fl_str_mv |
Pacheco, Luís Miguel Madaleno, Mara Correia, Pedro Maldonado, Isabel |
dc.subject.por.fl_str_mv |
Bankruptcy Manufacturing industry SMEs Logit Financial ratios |
topic |
Bankruptcy Manufacturing industry SMEs Logit Financial ratios |
description |
This paper aims to develop a model for predicting corporate bankruptcy for SMEs in the Portuguese manufacturing industry where this question remains rather unaddressed. Using profitability, activity, liquidity, leverage, and solvency ratios, it was added the size and age variables, for a group of 208 firms, including 49 bankrupt firms and 159 active firms, during the years 2011 to 2015. The logit model allowed us to estimate a model with 82.3% of predictive capacity. The most important variables identified were profitability, solvency, and size. Estimations only with the data closest to the bankruptcy date improved predictive capacity. It is evidenced that financial and non-financial variables can predict bankruptcy probability. A possible future approach would be to analyze a larger sample. Also, a larger period could be considered, allowing to test either the effects of the 2007/8 crisis or the effects of the recent economic turmoil related to Covid-19. Important for both corporate managers and investors. Conclusions may be disclosed regarding the influence that economic turmoil certainly has on corporate defaults and bankruptcies allowing its extension to other countries. The contribution of this paper is to find the best specification for a bankruptcy prediction model applied to the Portuguese manufacturing industry SMEs. This paper also contributes to the existing literature by using non-financial variables and analyzing a sector still unexplored in Portugal, albeit its conclusions can be extended to other countries. |
publishDate |
2022 |
dc.date.none.fl_str_mv |
2022-08-12T15:12:20Z 2022-08-01T00:00:00Z 2022-08 |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/11328/4411 |
url |
http://hdl.handle.net/11328/4411 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
1511-6670 https://doi.org/10.33736/ijbs.4863.2022 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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RCAAP |
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RCAAP |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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