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Forecasting Corporate Failure In Malaysian Industrial Sector Firms

Financial ratios have long been used as predictor of important events in financial markets of developed economies. Formulating business failure prediction models utilising financial ratios is no exception. However, there is hardly any evidence on failure prediction in developing markets such as M...

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Main Authors: Muhamad Sori, Zulkarnain, Abdul Hamid, Mohamad Ali, Md. Nassir, Annuar, Mohamad, Zainal Abidin
Format: Article
Language:English
Published: Asian Academy of Management (AAM) 2001
Subjects:
HD28-70 Management. Industrial Management
Online Access:http://eprints.usm.my/35467/1/6-1-2.pdf
http://eprints.usm.my/35467/
http://web.usm.my/aamj/6.1.2001/6-1-2.pdf
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spelling my.usm.eprints.35467 http://eprints.usm.my/35467/ Forecasting Corporate Failure In Malaysian Industrial Sector Firms Muhamad Sori, Zulkarnain Abdul Hamid, Mohamad Ali Md. Nassir, Annuar Mohamad, Zainal Abidin HD28-70 Management. Industrial Management Financial ratios have long been used as predictor of important events in financial markets of developed economies. Formulating business failure prediction models utilising financial ratios is no exception. However, there is hardly any evidence on failure prediction in developing markets such as Malaysia. This study develops a failure prediction model for industrial sector listed firms that discriminates between 24 failed and non-failed for the period 1980 to 1996. The findings show that the model correctly and significantly classified 91.1% and 89.3% of the failed and nonfailed firms respectively. An alternative prediction model developed based solely on accounting information showed similar results. These models predict failure up to 4 years before the actual event. The variables in the final model implies that profits, cash flows, working capital and net worth are important determinants of failures of firms listed in the Kuala Lumpur Stock Exchange. Asian Academy of Management (AAM) 2001 Article PeerReviewed application/pdf en http://eprints.usm.my/35467/1/6-1-2.pdf Muhamad Sori, Zulkarnain and Abdul Hamid, Mohamad Ali and Md. Nassir, Annuar and Mohamad, Zainal Abidin (2001) Forecasting Corporate Failure In Malaysian Industrial Sector Firms. Asian Academy of Management Journal (AAMJ), 6 (1). pp. 1-16. ISSN 1394-2603 http://web.usm.my/aamj/6.1.2001/6-1-2.pdf
institution Universiti Sains Malaysia
building Hamzah Sendut Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Sains Malaysia
content_source USM Institutional Repository
url_provider http://eprints.usm.my/
language English
topic HD28-70 Management. Industrial Management
spellingShingle HD28-70 Management. Industrial Management
Muhamad Sori, Zulkarnain
Abdul Hamid, Mohamad Ali
Md. Nassir, Annuar
Mohamad, Zainal Abidin
Forecasting Corporate Failure In Malaysian Industrial Sector Firms
description Financial ratios have long been used as predictor of important events in financial markets of developed economies. Formulating business failure prediction models utilising financial ratios is no exception. However, there is hardly any evidence on failure prediction in developing markets such as Malaysia. This study develops a failure prediction model for industrial sector listed firms that discriminates between 24 failed and non-failed for the period 1980 to 1996. The findings show that the model correctly and significantly classified 91.1% and 89.3% of the failed and nonfailed firms respectively. An alternative prediction model developed based solely on accounting information showed similar results. These models predict failure up to 4 years before the actual event. The variables in the final model implies that profits, cash flows, working capital and net worth are important determinants of failures of firms listed in the Kuala Lumpur Stock Exchange.
format Article
author Muhamad Sori, Zulkarnain
Abdul Hamid, Mohamad Ali
Md. Nassir, Annuar
Mohamad, Zainal Abidin
author_facet Muhamad Sori, Zulkarnain
Abdul Hamid, Mohamad Ali
Md. Nassir, Annuar
Mohamad, Zainal Abidin
author_sort Muhamad Sori, Zulkarnain
title Forecasting Corporate Failure In Malaysian Industrial Sector Firms
title_short Forecasting Corporate Failure In Malaysian Industrial Sector Firms
title_full Forecasting Corporate Failure In Malaysian Industrial Sector Firms
title_fullStr Forecasting Corporate Failure In Malaysian Industrial Sector Firms
title_full_unstemmed Forecasting Corporate Failure In Malaysian Industrial Sector Firms
title_sort forecasting corporate failure in malaysian industrial sector firms
publisher Asian Academy of Management (AAM)
publishDate 2001
url http://eprints.usm.my/35467/1/6-1-2.pdf
http://eprints.usm.my/35467/
http://web.usm.my/aamj/6.1.2001/6-1-2.pdf
_version_ 1643708504004886528
score 13.211869

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