Title: Corporate failure risk assessment of Greek companies

Authors: Athanasios Tsagkanos, Antonios Georgopoulos, Dimitrios P. Koumanakos, Evangelos P. Koumanakos

Addresses: Department of Business Administration, University of Patras, Sarantaporou 22, Patras 26223, Greece. ' Department of Business Administration, University of Patras, University Campus – Rio, P.O. Box 1391, Patras 26500, Greece. ' Department of Mechanical Engineering and Aeronautics, University of Patras, Vrachneika, Patras 25002, Greece. ' National Bank of Greece, Maizonos 51, Patras 26221, Greece

Abstract: In this paper, we investigate the determinants of corporate failure risk for the Greek non-financial companies using public accounts. Our motivation stems from the results of a recent international survey revealing that, during the period 2003–2004, Greece showed the biggest in terms of percentage, increase in corporate insolvencies among all the European countries. By exploiting a recent database and a set of variables as possible predictors of corporate failure, we use two competitive logit models comparing their predictive accuracy. Surprisingly, both the models exhibit low failure prediction ability a fact that intensify concerns about the quality of financial reporting of the Greek firms.

Keywords: bankruptcy prediction; logit models; Greece; corporate failure; risk assessment; non-financial companies; corporate insolvencies; financial reporting; reporting quality.

DOI: 10.1504/IJRAM.2008.019309

International Journal of Risk Assessment and Management, 2008 Vol.9 No.1/2, pp.5 - 14

Published online: 07 Jul 2008 *

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