Financial Ratio Selection for Distress Classification

Financial Ratio Selection for Distress Classification

Roberto Kawakami Harrop Galvao (Instituto Tecnológico de Aeronáutica, Brazil), Victor M. Becerra (University of Reading, UK) and Magda Abou-Seada (Middlesex University, UK)
Copyright: © 2005 |Pages: 6
DOI: 10.4018/978-1-59140-557-3.ch095
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Abstract

Prediction of corporate financial distress is a subject that has attracted the interest of many researchers in finance. The development of prediction models for financial distress started with the seminal work by Altman (1968), who used discriminant analysis. Such a technique is aimed at classifying a firm as bankrupt or nonbankrupt on the basis of the joint information conveyed by several financial ratios.

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