Bankruptcy Prediction in Australia
This paper compares the accuracies of different statistical models for forecasting bankruptcies when applied to Australian companies.Binary logistic regression analysis was used on models that are industry-specific and another that is industry-wide. An analysis using financial ratios as the independent variables for the time-period 2016-2017forhundreds of operating and bankrupted publicly listed companiesis presented in the paper. There are many advantages from the study, such as:helping the economy not to fall into a recession as a result of increased bankruptcies, helping investors make informed decisions, and mitigating unsuccessful ventures. Our results indicate that there is empirical evidence that show bankruptcies in companies is more accurately predicted by allocating companies to their respective industry, as opposed to an industry-wide model, which is commonthroughout many of the literature.
Keywords - Bankruptcy prediction; business failure; financial distress; insolvency; logistic regression; variable analysis; industry-specific