An Empirical Evaluation of Sampling Controversies in Ratio-Based Modelling of Corporate Collapse

Journal of Applied Research in Accounting and Finance (JARAF), Vol. 2, No. 2, pp. 15-26, 2007

16 Pages Posted: 6 Feb 2008

See all articles by Ghassan Hossari

Ghassan Hossari

Deakin University - Deakin Graduate School of Business

Sheikh F. Rahman

Swinburne University of Technology

Janek Ratnatunga

Monash University

Abstract

Empirical investigations regarding ratio-based modelling of corporate collapse have been on going for decades. With any study of an empirical nature, a data sample is a necessary prerequisite. It allows testing the performance of the prediction model, thereby establishing its practical relevance. However, it is necessary to first ensure that the data sample used satisfies certain conditions, and these have lead to some choice controversies. This paper considers the controversial issues that arise in data sampling, provides a critical evaluation of these issues, and makes choice recommendations on the controversial aspects, by empirically examining the literature.

Keywords: corporate collapse, bankruptcy prediction

JEL Classification: M41, G33, C10

Suggested Citation

Hossari, Ghassan and Rahman, Sheikh F. and Ratnatunga, Janek, An Empirical Evaluation of Sampling Controversies in Ratio-Based Modelling of Corporate Collapse. Journal of Applied Research in Accounting and Finance (JARAF), Vol. 2, No. 2, pp. 15-26, 2007, Available at SSRN: https://ssrn.com/abstract=1090482

Ghassan Hossari (Contact Author)

Deakin University - Deakin Graduate School of Business ( email )

70 Elgar Road
Burwood, Victoria 3125
Australia
+61 3 92445106 (Phone)

HOME PAGE: http://www.deakin.edu.au/

Sheikh F. Rahman

Swinburne University of Technology ( email )

Cnr Wakefield and William Streets, Hawthorn Victor
3122 Victoria, Victoria 3122
Australia

Janek Ratnatunga

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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