Failure and Value Creation: A Discriminant Analysis Applied to Moroccan Industrial Companies Listed on the Casablanca Stock Exchange

Abstract

This article purposes to assess the contribution of shareholder value creation as an explanatory variable for the failure of Moroccan industrial companies listed on the Casablanca stock exchange. It also offers a scoring that reflects the probabilities of the financial difficulties to occur. There were used data for 30 Moroccan industrial companies listed on the Casablanca stock exchange during the period of study from 2010 to 2018. Methodologically, a linear discriminant analysis was employed. The empirical results of the discriminant analysis applied during the period of 2010-2018 show that value creation, liquidity and the size of the company are the most determining variables in classifying companies according to the degree of financial difficulties. Thus, the results received make it possible to create a relationship among recurrent scientific knowledge about forecasting the companies’ failure and empirical findings in the context of Moroccan industrial companies listed on the Casablanca stock exchange.