European country heterogeneity in financial distress prediction: An empirical analysis with macroeconomic and regulatory factors

Angel Fernandez-Gamez, Manuel; Campos Soria, Juan Antonio; Santos, José António C.; Alaminos, David

http://hdl.handle.net/10400.1/16473

Use this identifier to reference this record.

Name:	Description:	Size:	Format:
16473 - main.pdf		783.57 KB	Adobe PDF	Download

Send Feedback

Authors

Angel Fernandez-Gamez, Manuel

Campos Soria, Juan Antonio

Santos, José António C.

Alaminos, David

Abstract(s)

This study tried to improve the understanding of the impact of context variables on the risk of financial difficulties from an European companies experience. To this end, a multilevel logistic model is developed to exploit the benefits of transnational analysis and to examine the effects of contextual factors in countries and the individual impacts of companies within each country. The resulting estimates and the post-estimation analysis based on non-parametric techniques demonstrated that country effects vary randomly but that significant variance exists in the level of financial distress within and between countries. The results also corroborate that companies' financial variables provide extremely important information. However, the macroeconomic and regulatory factors of the environments in which these companies operate help to explain, to a large extent, the existing heterogeneity among countries.