Abstract

http://ssrn.com/abstract=1978628
 
 

References (42)



 


 



Capital Structure and Corporate Failure Prediction: Theory and Applications


Rowland Bismark Pasaribu


Gunadarma University; ABFI Institute Perbanas

November 2, 2011

Journal of Economics and Business Vol. 5, No. 3, pp. 209-220, November 2011

Abstract:     
This paper addresses the theoretical foundations of corporate failure prediction, using the neo-classical theory of capital structure as a starting point. The paper intends to demonstrate the feasibility of such an approach in a simple setting, i.e. by using a simple theoretical model and a limited empirical analysis. A model of optimal capital structure is constructed and rewritten as a model of default probability. Its empirical implications are derived and tested on a sample of Indonesian data. It is concluded that this approach clearly has its limitations, but also that may it be a valuable contribution compared to the multitude of theory-less empirical studies and a useful alternative to the default theory.

Number of Pages in PDF File: 20

Keywords: default probabilities, capital structures, corporate failure, logistic regression

JEL Classification: G31, G32

Accepted Paper Series





Download This Paper

Date posted: January 3, 2012 ; Last revised: January 4, 2012

Suggested Citation

Pasaribu, Rowland Bismark, Capital Structure and Corporate Failure Prediction: Theory and Applications (November 2, 2011). Journal of Economics and Business Vol. 5, No. 3, pp. 209-220, November 2011. Available at SSRN: http://ssrn.com/abstract=1978628

Contact Information

Rowland Bismark Pasaribu (Contact Author)
Gunadarma University ( email )
Margonda Raya 100
Pondokcina, Depok
Jakarta, West Java 62-16424
Indonesia
ABFI Institute Perbanas ( email )
Perbanas Street
Karet Kuningan, Setiabudi
Jakarta Selatan, DKI Jakarta 12940
Indonesia
Feedback to SSRN


Paper statistics
Abstract Views: 836
Downloads: 252
Download Rank: 70,195
References:  42

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.360 seconds