Abstract
This study considers listed and unlisted small and medium-sized enterprises (SMEs) of the United States separately while developing one-year financial distress prediction model for them. Empirical analysis of financial distress performed using discrete-time duration-dependent hazard rate modelling technique with logit link and a set of financial covariates reveal striking differences between distress hazard of listed and unlisted SMEs. Almost an identical set of covariates exhibit significant discriminatory power for both listed and unlisted SMEs, but there exist significant differences in their weights of regression coefficients in respective groups. Further, Average Marginal Effects of respective covariates for unlisted group of SMEs are strikingly higher than their listed counterparts, suggesting higher vulnerability of unlisted firms due to changes in financial ratios. Our findings support the view that stock exchange listing can relieve SMEs from external financing constraints, thus reducing their likelihood of financial distress.
Original language | English |
---|---|
DOIs | |
Publication status | Published - 24 Apr 2015 |
Keywords
- Financial Distress
- SMEs
- Discrete Hazard Models
- Liquidity, Credit Risk
Fingerprint Dive into the research topics of 'Public vs Private SMEs: A comparison of distress hazard'. Together they form a unique fingerprint.
Profiles
-
Andros Gregoriou
- Brighton Business School - Professor in Finance
- Centre for Change, Entrepreneurship and Innovation Management
Person: Academic