Brunel University Research Archive (BURA) >
College of Business, Arts and Social Sciences >
Dept of Economics and Finance >
Dept of Economics and Finance Research Papers >

Please use this identifier to cite or link to this item: http://bura.brunel.ac.uk/handle/2438/930

Title: A panel analysis of UK industrial company failure
Authors: Hunter, J
Isachenkova, N
Keywords: Company Failure Risk, Unobserved Heterogeneity, Conditional Fixed Effects
Logit Model.
Publication Date: 2003
Publisher: Brunel University
Citation: Economics and Finance Working papers, Brunel University, 03-10
Abstract: We examine the failure determinants for large quoted UK industrials using a panel data set comprising 539 firms observed over the period 1988-93. The empirical design employs data from company accounts and is based on Chamberlain’s conditional binomial logit model, which allows for unobservable, firm-specific, time-invariant factors associated with failure risk. We find a noticeable degree of heterogeneity across the sample companies. Our panel results show that, after controlling for unobservables, lower liquidity measured by the quick assets ratio, slower turnover proxied by the ratio of debtors turnover, and profitability were linked to the higher risk of insolvency in the analysis period. The findings appear to support the proposition that the current cash-flow considerations, rather than the future prospects of the firm, determined company failures over the 1990s recession.
URI: http://bura.brunel.ac.uk/handle/2438/930
Appears in Collections:Economics and Finance
Dept of Economics and Finance Research Papers

Files in This Item:

File Description SizeFormat
03-10.pdf74.75 kBAdobe PDFView/Open

Items in BURA are protected by copyright, with all rights reserved, unless otherwise indicated.