The Assessment of Company Solvency and Performance Using a Statistical Model

Taffler, Richard

doi:10.1080/00014788.1983.9729767

Cited by 253 publications

(227 citation statements)

References 35 publications

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“…By the time of the second wave, firms had improved their governance monitoring and incentive mechanisms, particularly in the UK in response to reports such as the Cadbury Report (1992), such that improvements in profitability were less likely to occur. In addition, Leslie and Oyer (2009) The z-score is often used as a proxy for bankruptcy risk, for example, Taffler (1982 and1983), Sudarsanam and Lai (2001), Dichev (1998), Lasfer et al (1996), Molina (2005) and Agrawal and Taffler (2007).…”

Section: Buy-outs In Generalmentioning

confidence: 99%

Public-to-private buy-outs, distress costs and private equity

Weir

Wright

Scholes

2008

Applied Financial Economics

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This article extends previous work by testing the financial distress costs hypothesis in the context of the UK, a contract-based distress resolution system, and by considering the role of private equity firms. Using a hand-collected dataset covering 115 public-to-private buy-outs (PTPs) completed in the period 1998 to 2001 and 115 randomly selected firms that remained public, we find contrasting evidence to that for US PTPs. Consistent with the financial distress costs model, firms going private are more likely to have better asset collateralization, have less debt and be more diversified. However, we also find that UK PTPs are more likely to be younger, experience poor stock market performance and be smaller than firms remaining public. In addition, PTPs did not have lower R&D or higher free cash flows. Our results therefore, indicate that in the UK financial distress costs may not be central to the decision to go private.We also find that private equity providers are more likely to be involved in the process if the firm going private is more diversified, has a higher Q ratio and had been quoted for a shorter period of time and have lower board shareholdings. This suggests that private equity providers are more interested in growth prospects than potential financial distress costs.

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Section: Buy-outs In Generalmentioning

confidence: 99%

Public-to-private buy-outs, distress costs and private equity

Weir

Wright

Scholes

2008

Applied Financial Economics

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“…13 The trend of debtors to current liabilities ratio in the "non-failed 20" and "failed 11" companies 142…”

Section: 12mentioning

confidence: 99%

“…It is surprising, however, that the only extensive work to have been carried out in Britain is by Dr Richard Taffler at City University Business School [11,12,13,14,15]. The major part of his work has been conducted using UK based data and he has produced several predictive models for manufacturing companies.…”

Section: Conclusion To A-scorementioning

confidence: 99%

A methodology for predicting company failure in the construction industry

Abidali

1995

Construction Management and Economics

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“…The early work of Beaver (1966) suggests up to 30 ratios in six categories: cash flow; income; debt to total assets; liquid assets to total assets; liquid assets to current debt; and turnover ratios. Subsequent research confirms the usefulness of accounting ratios in predicting distress (Altman, 1968;Ohlson, 1980;Shumway, 2001;Taffler, 1983;Zmijewski;. Beaver et al (2005Beaver et al ( , 2010 summarize this literature and show that the three key ratios are: 1) ROA (profitability of assets); 2) EBITDA to total liabilities (ability of cash flow to service the payments); and 3) Total liabilities to total assets (a measure of assets available to repay debt).…”

Section: The Use Of Accounting Information To Predict Financial Distrmentioning

confidence: 73%

Who Uses Financial Reports and for What Purpose? Evidence from Capital Providers

Cascino

Clatworthy

Osma

et al. 2014

Accounting in Europe

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We review the academic literature on the use of financial reporting information by capital providers. We classify our findings by investor type and by information objective. While most capital providers use accounting information, our survey indicates that they do so in a variety of ways with financial reporting information competing with other sources of information. We also find that information intermediaries are influential in both credit and equity markets, making the identification of a typical target 'user' inherently difficult. Our main findings question the underlying objective of the Conceptual Framework to guide the development of standards for general-purpose financial statements to provide a typical knowledgeable investor with a true and fair view about the reporting entity. Finally, we identify gaps in the literature and suggest areas where future research can help inform important academic and policy debates.

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The Assessment of Company Solvency and Performance Using a Statistical Model

Cited by 253 publications

References 35 publications

Public-to-private buy-outs, distress costs and private equity

Public-to-private buy-outs, distress costs and private equity

A methodology for predicting company failure in the construction industry

Who Uses Financial Reports and for What Purpose? Evidence from Capital Providers

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