Corporate bankruptcy prediction in Japan

Kichinosuke Takahashi, Yukiharu Kurokawa, Kazunori Watase

Research output: Contribution to journalArticle

21 Citations (Scopus)

Abstract

The purpose of this study is to highlight the financial characteristics of failed firms in Japan, and to construct corporate bankruptcy prediction models with greater prediction accuracy. Our principal component analysis indicated that failed firms in Japan could be classified into two groups: a group having negative financial structures and a group having a declining flow of funds. Additionally, they can be classified into two other different categories of groups: one whose financial position during three years before shows a 'V' shape and another group that shows a 'XXX' shape. Our discriminant analysis indicated that improved prediction accuracy could be obtained by using, as predictor variables, both ratios and absolute amounts based on cash base financial statement data three years before failure. This data was adjusted to properly reflect the exceptions, reservations, and qualifications appearing in the audit reports and those based on accrual base financial statement data.

Original languageEnglish
Pages (from-to)229-247
Number of pages19
JournalJournal of Banking and Finance
Volume8
Issue number2
DOIs
Publication statusPublished - 1984

Fingerprint

Prediction accuracy
Financial statements
Bankruptcy prediction
Japan
Flow of funds
Predictors
Prediction model
Audit reports
Cash
Financial structure
Qualification
Discriminant analysis
Reservation
Principal component analysis

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Corporate bankruptcy prediction in Japan. / Takahashi, Kichinosuke; Kurokawa, Yukiharu; Watase, Kazunori.

In: Journal of Banking and Finance, Vol. 8, No. 2, 1984, p. 229-247.

Research output: Contribution to journalArticle

Takahashi, K, Kurokawa, Y & Watase, K 1984, 'Corporate bankruptcy prediction in Japan', Journal of Banking and Finance, vol. 8, no. 2, pp. 229-247. https://doi.org/10.1016/0378-4266(84)90005-0
Takahashi, Kichinosuke ; Kurokawa, Yukiharu ; Watase, Kazunori. / Corporate bankruptcy prediction in Japan. In: Journal of Banking and Finance. 1984 ; Vol. 8, No. 2. pp. 229-247.
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