Abstract
The paper by Chen and Lee is interesting in that it presents an applic:ation of survival analysis in predicting corporate financial distress. The oil and gas indusljy is used as an example. It will be noted later that an earlier paper by Lane, Looney, and Wansley (1986) used the Cox propcMtional hazard model to predict bankruptcy in the banking industry. Although Chen and Lee mention the existence of that article, they do not give it adequate credit. My discussionconsistsof (1) a briefoverview of the experimental design typically used in survival analysis and its applicability to finandal distress, (2) concern about the hazard-proportionality assumption, (3) the infonnation gained beyond an application of ordinary least squares, and (4) the contribution to the literature.
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