Predicting Business Failures in Canada

Boritz, J. Efrim; Kennedy, Duane B.; Sun, Jerry Y.
May 2007
Accounting Perspectives;2007, Vol. 6 Issue 2, p141
Academic Journal
Empirical researchers and practitioners frequently use the bankruptcy prediction models developed by Altman (1968) and Ohlson (1980). This poses a potential problem for practitioners in Canada and researchers working with Canadian data because the Altman and Ohlson models were developed using U.S. data. We compare Canadian bankruptcy prediction models developed by Springate (1978), Altman and Levallee (1980), and Legault and Véronneau (1986) against the Altman and Ohlson models using recent data to determine the robustness of all models over time and the applicability of the Altman and Ohlson models to the Canadian environment. Our results indicate that the models developed by Springate (1978) and Legault and Véronrieau (1986) yield similar results to the Ohlson (1980) model while being simpler and requiring less data. The Altman (1968) and Altman and Levallee (1980) models generally have lower performance than the other models. All models have stronger performance with the original coefficients than with re-estimated coefficients. Our results regarding the Altman and Ohlson models are consistent with Begley, Ming, and Watts (1996), who found that the original version of the Ohison model is superior to the Altman model and is robust over time.


Related Articles

  • Firms see $$$ in clients' Ch. 11 filings. Milicia, Joe // Marketing News;6/10/2002, Vol. 36 Issue 12, p8 

    The article reports on the rise in cases of business bankruptcy in the U.S. Business bankruptcy filings were up nearly 12% in 2001 after hitting a 20-year low in 2000. Chapter 11, the most common form of bankruptcy, allows a company to reorganize its finances without the threat of creditors'...

  • The Emerging Market for Trade Claims of Bankrupt Firms. Beranek, William; Jones, Steven L. // FM: The Journal of the Financial Management Association;Summer1994, Vol. 23 Issue 2, p76 

    The article discusses the growing market for trade claims against bankrupt firms. Trading in claims serves a host of private needs, and the emergence of this market offers yet another illustration of how markets arise to serve mutually beneficial interests. In general, the party buying a claim...

  • DIAGNOSTICS OF BANKRUPTCY THREAT TO ENTERPRISES. Garškaitė-Milvydienė, Kristina // Journal of Security & Sustainability Issues;Mar2012, Vol. 1 Issue 3, p197 

    The prepared diagnostics of bankruptcy threatening to the enterprises is submitted in the present thesis. Herein, bankruptcy threatening to the enterprises is being diagnosed as per three stages, i.e. the condition of the enterprise and the reasons, which have determined such condition, are...

  • RESTRUCTURING OF INSOLVENT CORPORATIONS IN CANADA. Krüger, J. G. A. // Potchefstroom Electronic Law Journal;2010, Vol. 13 Issue 3, p2 

    The article outlines the formal restructuring of insolvent corporations in Canada based on the purview of South African audience in South Africa. It explains that bankrupt person refers to a person who has made an assignment into bankruptcy or against whom a bankruptcy order has made. Meanwhile,...

  • INVESTIGATING BANKRUPTCY CHANGES WITH THE MALMQUIST PRODUCTIVITY INDEX. Sarabandi, S.; Male Khalife, M. Rostami // Interdisciplinary Journal of Contemporary Research in Business;Oct2012, Vol. 4 Issue 6, p747 

    A major threat to the national economy of a country is its companies' bankruptcy. Detecting and preventing bankruptcy provide valuable information for the countries. One of important methods of detecting bankruptcy is the use of Data Envelopment Analysis (DEA) which has been applied by several...

  • Final Chapter. Savodnik, Peter // New York;1/19/2009, Vol. 42 Issue 2, p12 

    The article discusses the nature of the proceedings at the U.S. Bankruptcy Court In New York during the last three months of 2008. There were 139 bankruptcy filings in the aforementioned period, compared with 30 filings during the same period in 2007. Also discussed are businesses who are not...

  • Bankruptcies in Alaska: A Significant Decline. Spohn, Kari // Alaska Business Monthly;Aug2006, Vol. 22 Issue 8, p95 

    The article reports on the bankruptcies filed in Alaska in 2006 which showed a decrease of almost 62 percent. A large number of Alaska's bankruptcy filings occurred in Anchorage. Fairbanks also reported a significant decrease in the number of bankruptcies filed. Majority of the filings are...

  • SUFFERING FROM... REPUTATION BANKRUPTCY. Kirwan-Taylor, Helen // Management Today;Oct2010, p15 

    The article offers information on the concept reputation bankruptcy, which is increasingly becoming a status of modern time.

  • There appears to be no bright spot for city. Crain, Keith // Crain's Detroit Business;11/19/2012, Vol. 28 Issue 48, p0008 

    In this article the author says that the city Detroit, Michigan is heading towards bankruptcy. He says that no one knows how dire it will be once bankruptcy is determined. The author also says that the whole ordeal is frustrating to everyone, who have watched the city spiral out of control for...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics