Journal of

Marketing Development and Competitiveness

Scholar Gateway

Abstracts prior to volume 5(1) have been archived!

Issue 5(1), October 2010 -- Paper Abstracts

Girard  (p. 9-22)

Cooper (p. 23-32)

Kunz-Osborne (p. 33-41)

Coulmas-Law (p.42-46)

Stasio (p. 47-56)

Albert-Valette-Florence (p.57-63)

Zhang-Rauch (p. 64-70)

Alam-Yasin (p. 71-78)

Mattare-Monahan-Shah (p. 79-94)

Nonis-Hudson-Hunt (p. 95-106)

JOURNAL OF APPLIED BUSINESS AND ECONOMICS

Financial Distress Models: How Pertinent Are Sampling Bias Criticisms?

Author(s): Robert F. Hodgin, Roberto Marchesini

Citation: Robert F. Hodgin, Roberto Marchesini, (2011) "Financial Distress Models: How Pertinent Are Sampling Bias Criticisms?," Journal of Applied Business and Economics, Vol. 12, Iss. 4, pp. 29 - 35

Article Type: Research paper

Publisher: North American Business Press

Abstract:

The finance literature shows that over-sampling of distressed companies, time-period selection, crossindustry

variation and choice of distress indicator can bias estimating model predictive accuracy. We

address those arguments using a sample of high-leverage companies where loan default is the indicator

variable. We separately test the predictive accuracy of two published multivariate financial distress

models by Zmijewski and Marchesini. The predictive accuracy for both models was generally comparable

for the new dataset. Further, each model’s predictive accuracy was comparable to that found in their

respective original datasets. These comparative results raise doubt regarding the relative importance of

sample bias criticisms.