Prediction of Corporate Financial Distress: Evidence from Malaysian Listed Firms during the Asian Financial Crisis

Abstract

The aims of this study are twofold: (1) to formulate a model that predicts corporate financial distress and (2), to apply the model to trace the potential failure of Malaysian financially distressed firms due to the Asian Financial Crisis of 1997. The model successfully predicts firm's health at the rate of 88%. The predictive accuracy of the model reveals that it was significantly better than chance.