Research Article Open Access

Retail Bankruptcy Prediction

Johnny Pang1 and Mark Kogel1
  • 1 Monmouth University, USA
American Journal of Economics and Business Administration
Volume 5 No. 1, 2013, 29-46

DOI: https://doi.org/10.3844/ajebasp.2013.29.46

Published On: 13 September 2013

How to Cite: Pang, J. & Kogel, M. (2013). Retail Bankruptcy Prediction. American Journal of Economics and Business Administration, 5(1), 29-46. https://doi.org/10.3844/ajebasp.2013.29.46

Abstract

This study reintroduces the famous discriminant functions from Edward Altman and Begley, Ming and Watts (BMW) that were used to predict bankrupts. We will formulate three new discriminant functions which differ from Altman’s and BMW’s re-estimated Altman model. Altman’s models as well as Begley, Ming and Watts’s re-estimated Altman model apply to publicly traded industries, whereas the new models formulated in this study are based on retail companies. The three new functions will provide better predictions on retail bankruptcy and they will minimize the chance of misclassifications.

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Keywords

  • Multiple Discriminant Analysis
  • MDA
  • Altman’s z Score
  • BMW’s z Score
  • Retail
  • Bankruptcy