Mario Situm | University of Applied Sciences Kufstein/Tyrol (original) (raw)
Papers by Mario Situm
SSRN Electronic Journal, 2000
ABSTRACT
SSRN Electronic Journal, 2000
ABSTRACT
SSRN Electronic Journal, 2000
... contracts. They permit the lenders to request all amount outstanding to become immediately pa... more ... contracts. They permit the lenders to request all amount outstanding to become immediately paid (Vinter 2006, p. 179). Events of default are beside of representations and warranties typical loan agreements in project financing. The ...
This study analysed how insolvent firms differ from firms which have successfully recovered from ... more This study analysed how insolvent firms differ from firms which have successfully recovered from distress. The results show that companies that have recovered from distress are in a position to better manage their gross profit, increase their profitability and exhibit higher interest coverage when compared to insolvent firms. Therefore, managers should focus within turnaround activities on these aspects and introduce appropriate measures to improve the associated accounting ratios. Making a clear distinction between the two states within the prediction model remains difficult and provides evidence that accounting ratios alone are not sufficient in explaining a successful turnaround when compared to the state of insolvency. It seems that there are specific non-accounting measures, not considered within the scope of this study, which may be useful to improve segregation between the two groups of firms.
This study investigated the potential of a specifi c trend, defi ned as the relative change of a... more This study investigated the potential of a specifi c trend, defi ned as the relative change of
accounting ratios for two consecutive years, to improve the classifi cation accuracy and
model performance of insolvency prediction models based on multivariate linear discriminant
analysis. The results show that the respective trend can include information from both
consecutive years, but this informational content could not be exploited to improve early
detection of corporate crises and insolvencies.
The purpose of this study was to analyse whether employee-related ratios derived from accounts h... more The purpose of this study was to analyse whether employee-related ratios derived
from accounts have incremental predictive power for the early detection of corporate
crises and bankruptcies. Based on the literature reviewed, it can be seen that not much
attention has been drawn to this task, indicating that further research is justified. For
empirical research purposes, a database of Austrian companies was used for the time period
2003 to 2005 in order to develop multivariate linear discriminant functions for the
classification of companies into the two states; bankrupt and non-bankrupt, and to detect
the contribution of employee-related ratios in explaining why firms fail. Several ratios
from prior research were used as potential predictors. In addition, other separate ratios
were analysed, including employee-related figures. The results of the study show that while
employee-related ratios cannot contribute to an improvement in the classification performance
of prediction models, signs of these ratios within the discriminant functions did
show the expected directions. Efficient usage of employees seems to play an important role
in decreasing the probability of insolvency. Additionally, two employee-related ratios were
found which can be used as proxies for the size of the firm. This had not been identified in
prior studies for this factor.
Versucht man, die wirtschaftliche und finanzielle Situation eines Unternehmens zu beurteilen, da... more Versucht man, die wirtschaftliche und finanzielle Situation eines Unternehmens zu
beurteilen, darf man keinesfalls dessen Strategie außer Acht lassen. Es ist jedoch
nicht einfach, mögliche strategische Krisen frühzeitig zu erkennen. Ein neues Analysemodell
liefert einen Signalwert, der Krisen auf den ersten Blick sichtbar macht.
Research in business failure and insolvency prediction provides numerous potential variables, whi... more Research in business failure and insolvency prediction provides numerous potential variables, which are in the position to differentiate between solvent and insolvent firms. Nevertheless, not all of them have the same discriminatory power, and therefore their general applicability as crisis indicators within early warning systems seems questionable. The paper aims to demonstrate that gearing-ratio is not an appropriate predictor for firm failures/bankruptcies. The first and the second order derivatives for the gearing-ratio formula were computed and mathematically analysed. Based on these results an interpretation was given and the suitability of gearing-ratio as a discriminator within business failure prediction models was discussed. These theoretical findings were then empirically tested using financial figures from financial statements of Austrian companies for the observation period between 2008 and 2010. The theoretical assumptions showed that gearing-ratio is not a suitable predictor for early warning systems. This finding was confirmed with empirical data. The inclusion of gearing-ratio within business failure prediction models is not able to provide early warning signals and should therefore be ignored in future model building attempts.
This study analyses the potential of the age and the size of the firm for the purpose of bankrupt... more This study analyses the potential of the age and the size of the firm for the purpose of bankruptcy prediction. Using a data base consisting of Austrian bankrupt and non-bankrupt companies for the period between 2000 and 2011 differences and similarities for these variables are analysed and some conclusions for the suitability as predictors for bankruptcies are reported.
This paper presents two business failure prediction models developed with multivariate linear di... more This paper presents two business failure prediction models developed with multivariate
linear discriminant analysis and multivariate logistic regression. The financial ratios as
predictors for the models were selected based on results from previous empirical research. It
was assumed that companies can be categorized into three classes – healthy (group 1), crisisresistant
(group 2) and insolvency endangered (group 3) – which are describing different
economic conditions. Data for model building were obtained by a survey of 35 professionals
from management consulting and banking industry. The results show consistency with
findings of prior research. High values for equity-ratio, EBIT/total assets, operating
cashflow/financial liabilities and percentage sales development are positively related to
financial health. Within model building several problems occurred, which influenced
classification accuracy. Non-normality of data had an impact on discriminant analysis, but
also on logistic regression. Successful preliminary analyses of suitable predictors are not a
guarantee that model fit including statistically significant variables will provide a superior
prediction model. This indicates that model building is heavily dependent on the quality of
metrics used. Logistic regression was less sensitive to outliers in terms of prediction sign
within classification formula. It was also shown that crisis indicators used in practice are
similar to those proposed by empirical research and literature.
SSRN Electronic Journal, 2000
ABSTRACT
SSRN Electronic Journal, 2000
ABSTRACT
SSRN Electronic Journal, 2000
... contracts. They permit the lenders to request all amount outstanding to become immediately pa... more ... contracts. They permit the lenders to request all amount outstanding to become immediately paid (Vinter 2006, p. 179). Events of default are beside of representations and warranties typical loan agreements in project financing. The ...
This study analysed how insolvent firms differ from firms which have successfully recovered from ... more This study analysed how insolvent firms differ from firms which have successfully recovered from distress. The results show that companies that have recovered from distress are in a position to better manage their gross profit, increase their profitability and exhibit higher interest coverage when compared to insolvent firms. Therefore, managers should focus within turnaround activities on these aspects and introduce appropriate measures to improve the associated accounting ratios. Making a clear distinction between the two states within the prediction model remains difficult and provides evidence that accounting ratios alone are not sufficient in explaining a successful turnaround when compared to the state of insolvency. It seems that there are specific non-accounting measures, not considered within the scope of this study, which may be useful to improve segregation between the two groups of firms.
This study investigated the potential of a specifi c trend, defi ned as the relative change of a... more This study investigated the potential of a specifi c trend, defi ned as the relative change of
accounting ratios for two consecutive years, to improve the classifi cation accuracy and
model performance of insolvency prediction models based on multivariate linear discriminant
analysis. The results show that the respective trend can include information from both
consecutive years, but this informational content could not be exploited to improve early
detection of corporate crises and insolvencies.
The purpose of this study was to analyse whether employee-related ratios derived from accounts h... more The purpose of this study was to analyse whether employee-related ratios derived
from accounts have incremental predictive power for the early detection of corporate
crises and bankruptcies. Based on the literature reviewed, it can be seen that not much
attention has been drawn to this task, indicating that further research is justified. For
empirical research purposes, a database of Austrian companies was used for the time period
2003 to 2005 in order to develop multivariate linear discriminant functions for the
classification of companies into the two states; bankrupt and non-bankrupt, and to detect
the contribution of employee-related ratios in explaining why firms fail. Several ratios
from prior research were used as potential predictors. In addition, other separate ratios
were analysed, including employee-related figures. The results of the study show that while
employee-related ratios cannot contribute to an improvement in the classification performance
of prediction models, signs of these ratios within the discriminant functions did
show the expected directions. Efficient usage of employees seems to play an important role
in decreasing the probability of insolvency. Additionally, two employee-related ratios were
found which can be used as proxies for the size of the firm. This had not been identified in
prior studies for this factor.
Versucht man, die wirtschaftliche und finanzielle Situation eines Unternehmens zu beurteilen, da... more Versucht man, die wirtschaftliche und finanzielle Situation eines Unternehmens zu
beurteilen, darf man keinesfalls dessen Strategie außer Acht lassen. Es ist jedoch
nicht einfach, mögliche strategische Krisen frühzeitig zu erkennen. Ein neues Analysemodell
liefert einen Signalwert, der Krisen auf den ersten Blick sichtbar macht.
Research in business failure and insolvency prediction provides numerous potential variables, whi... more Research in business failure and insolvency prediction provides numerous potential variables, which are in the position to differentiate between solvent and insolvent firms. Nevertheless, not all of them have the same discriminatory power, and therefore their general applicability as crisis indicators within early warning systems seems questionable. The paper aims to demonstrate that gearing-ratio is not an appropriate predictor for firm failures/bankruptcies. The first and the second order derivatives for the gearing-ratio formula were computed and mathematically analysed. Based on these results an interpretation was given and the suitability of gearing-ratio as a discriminator within business failure prediction models was discussed. These theoretical findings were then empirically tested using financial figures from financial statements of Austrian companies for the observation period between 2008 and 2010. The theoretical assumptions showed that gearing-ratio is not a suitable predictor for early warning systems. This finding was confirmed with empirical data. The inclusion of gearing-ratio within business failure prediction models is not able to provide early warning signals and should therefore be ignored in future model building attempts.
This study analyses the potential of the age and the size of the firm for the purpose of bankrupt... more This study analyses the potential of the age and the size of the firm for the purpose of bankruptcy prediction. Using a data base consisting of Austrian bankrupt and non-bankrupt companies for the period between 2000 and 2011 differences and similarities for these variables are analysed and some conclusions for the suitability as predictors for bankruptcies are reported.
This paper presents two business failure prediction models developed with multivariate linear di... more This paper presents two business failure prediction models developed with multivariate
linear discriminant analysis and multivariate logistic regression. The financial ratios as
predictors for the models were selected based on results from previous empirical research. It
was assumed that companies can be categorized into three classes – healthy (group 1), crisisresistant
(group 2) and insolvency endangered (group 3) – which are describing different
economic conditions. Data for model building were obtained by a survey of 35 professionals
from management consulting and banking industry. The results show consistency with
findings of prior research. High values for equity-ratio, EBIT/total assets, operating
cashflow/financial liabilities and percentage sales development are positively related to
financial health. Within model building several problems occurred, which influenced
classification accuracy. Non-normality of data had an impact on discriminant analysis, but
also on logistic regression. Successful preliminary analyses of suitable predictors are not a
guarantee that model fit including statistically significant variables will provide a superior
prediction model. This indicates that model building is heavily dependent on the quality of
metrics used. Logistic regression was less sensitive to outliers in terms of prediction sign
within classification formula. It was also shown that crisis indicators used in practice are
similar to those proposed by empirical research and literature.