The Research of Financial Distress Prediction Model

Abstract

The impact of financial distress is quite extensive In order to foresee the precursor of financial distress firms this study is going to construct a model with different types of variables and is applicable for all industries Investors and banks can avoid the firms with potential risk of financial distress with this prediction model This study will discuss whether employing different types variables will increase the prediction power of the model and decrease the type II error The variables employed by this study are the accounting-based corporate governance and market information variables Finally the result shows that when applying different types of variables into the financial distress prediction model the prediction power will increase and type II error will decrease in the test data of two and three years before financial distress occurs However the prediction power dose not increase and type II error does not decrease when adding the market information variables in the data of one year before financial distress occurs

Date of Award	2019
Original language	English
Supervisor	Hsuan-Chu Lin (Supervisor)