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Article
Publication date: 18 October 2018

Fraz Inam, Aneeq Inam, Muhammad Abbas Mian, Adnan Ahmed Sheikh and Hayat Muhammad Awan

Considering the economic dimension of sustainability, the purpose of this paper is to analyze the risk of bankruptcy in the Pakistani firms of the non-financial sector…

1202

Abstract

Purpose

Considering the economic dimension of sustainability, the purpose of this paper is to analyze the risk of bankruptcy in the Pakistani firms of the non-financial sector from years 1995 to 2017.

Design/methodology/approach

Three techniques were used which include multivariate discriminant analysis (MDA), logit regression and multilayer perceptron artificial neural networks. The accounting data of firms were selected one year before the bankruptcy.

Findings

Findings were obtained by comparing and analyzing the methods which show that neural networks model outperforms in the prediction of bankruptcy. They further conclude that profitability and leverage indicators have the power of discrimination in bankruptcy prediction and the best variables to predict financial distress are also found and indicated.

Practical implications

Practically, this study may help the firms to better anticipate the risks of getting bankrupt by choosing the right method and to make effective decision making for organizational sustainability.

Originality/value

Three different techniques were used in this research to predict the bankruptcy of non-financial sector in Pakistan to make an effective prediction.

Details

Journal of Economic and Administrative Sciences, vol. 35 no. 3
Type: Research Article
ISSN: 1026-4116

Keywords

Content available
Article
Publication date: 11 September 2019

Kuperan Viswanathan and Sulaman Hafeez Siddiqui

244

Abstract

Details

Journal of Economic and Administrative Sciences, vol. 35 no. 3
Type: Research Article
ISSN: 1026-4116

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