A heuristic framework for ratio-based modelling of corporate collapse

Hossari, Ghassan 2007, A heuristic framework for ratio-based modelling of corporate collapse, in 12th Finsia-Melbourne Centre for Financial Studies Banking and Finance Conference, Melbourne Centre for Financial Studies, Melbourne, Vic., pp. 1-29.

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Title A heuristic framework for ratio-based modelling of corporate collapse
Author(s) Hossari, Ghassan
Conference name Finsia-Melbourne Centre for Financial Studies Banking and Finance Conference (12th : 2007 : Melbourne, Victoria)
Conference location Melbourne, Victoria
Conference dates 24-25 September 2007
Title of proceedings 12th Finsia-Melbourne Centre for Financial Studies Banking and Finance Conference
Editor(s) [Unknown]
Publication date 2007
Conference series Finsia and Melbourne Centre for Financial Studies Banking and Finance Conference
Start page 1
End page 29
Publisher Melbourne Centre for Financial Studies
Place of publication Melbourne, Vic.
Keyword(s) corporate collapse
heuristic framework
financial ratios
Summary This paper draws on empirical evidence to demonstrate that a heuristic framework signals collapse with significantly higher accuracy than the traditional static approach. Using a sample of 494 US publicly listed companies comprising 247 collapsed matched with 247 financially healthy ones, a heuristic framework is decisively superior the closer one gets to the event of collapse, culminating in 12.5% more overall accuracy than a static approach during
the year of collapse. An even more dramatic improvement occurs in relation to reduction of Type I error, with a heuristic framework delivering an improvement of 66.7% over its static counterpart.
Language eng
Field of Research 150201 Finance
HERDC Research category E1 Full written paper - refereed
Persistent URL http://hdl.handle.net/10536/DRO/DU:30008024

Document type: Conference Paper
Collection: Deakin Graduate School of Business
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