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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

2957

Abstract

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.

Keywords

Citation

Gamesalingam, S. and Kumar, K. (2001), "Detection of financial distress via multivariate statistical analysis", Managerial Finance, Vol. 27 No. 4, pp. 45-55. https://doi.org/10.1108/03074350110767132

Publisher

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MCB UP Ltd

Copyright © 2001, MCB UP Limited

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