Firm dynamics and bankruptcy processes: A new theoretical model

This paper introduces a theoretical model that relates firm dynamics to bankruptcy processes on both univariate and multivariate bases. The distinctiveness of the study lies in estimation default using framework where are linked process itself. structure builds relations among constructs viewed from perspective sufficiently wide demonstrate value addition dilution. univariate-based results indicate variables determined via successfully differentiate distressed firms non-distressed other firms, although evidence analysis facilitate 90%+ correct distressed/non-distressed classification rate for 1- 2-year periods. findings provide road map selecting most appropriate prediction identifying role each process. accuracy does not depend solely upon statistical techniques but also reflects variable's underpinning. is shown be useful rating general credit approval decisions particular.