Corporate failure risk assessment of Greek companies

In this paper, we investigate the determinants of corporate failure risk for the Greek non-financial companies using public accounts. Our motivation stems from the results of a recent international survey revealing that, during the period 2003?2004, Greece showed the biggest in terms of percentage, increase in corporate insolvencies among all the European countries. By exploiting a recent database and a set of variables as possible predictors of corporate failure, we use two competitive logit models comparing their predictive accuracy. Surprisingly, both the models exhibit low failure prediction ability a fact that intensify concerns about the quality of financial reporting of the Greek firms.

Keywords: bankruptcy prediction, logit models, Greece, corporate failure, risk assessment, non-financial companies, corporate insolvencies, financial reporting, reporting quality