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Detection of financial distress via multivariate statistical analysis

S. Gamesalingam (Institute of Information Sciences and Technology, Massey University, Palmerston North, New Zealand)
Kuldeep Kumar (School of Information Technology, Bond University, Gold Coast, Queensland 4229, Australia)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 April 2001



Describes the ability of modern computer‐driven multivariate statistical analysis to deal with complex data and the development of statistical models for predicting financial distress. Applies multivariate techniques to 1986‐1991 financial ratio data for Australian failed (29) and nonfailed (42) companies; and explains the techniques used (principal components analysis, factor analysis, discriminant analysis and cluster analysis) and the different types of information they can provide to help identify the distress levels of companies. Predicts that multivariate methods will change the way researchers think about problems and design their research. An unusually clear exposition of the application of multivariate methods.



Gamesalingam, S. and Kumar, K. (2001), "Detection of financial distress via multivariate statistical analysis", Managerial Finance, Vol. 27 No. 4, pp. 45-55.




Copyright © 2001, MCB UP Limited

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