Tax Arrears Versus Financial Ratios in Bankruptcy Prediction

Oliver Lukason, Art Andresson
2019 Journal of Risk and Financial Management  
This paper aims to compare the usefulness of tax arrears and financial ratios in bankruptcy prediction. The analysis is based on the whole population of Estonian bankrupted and survived SMEs from 2013 to 2017. Logistic regression and multilayer perceptron are used as the prediction methods. The results indicate that closer to bankruptcy, tax arrears' information yields a higher prediction accuracy than financial ratios. A combined model of tax arrears and financial ratios is more useful than
more » ... more useful than the individual models. The results enable us to outline several theoretical and practical implications.
doi:10.3390/jrfm12040187 fatcat:sdgzdr7arfh67cscxtvhhvyu4a