The DOI matches its Crossref record; 18 of the 18 references it cites were found in a registry or an index.
Forecasting Bankruptcy More Accurately: A Simple Hazard Model
Open accessAbstract
I argue that hazard models are more appropriate for forecasting bankruptcy than the single-period models used previously. Single-period bankruptcy models give biased and inconsistent probability estimates while hazard models produce consistent estimates. I describe a simple technique for estimating a discrete-time hazard model with a logit model estimation program. Applying my technique, I find that about half of the accounting ratios that have been used in previous models are not statistically significant bankruptcy predictors. Moreover, several market-driven variables are strongly related to bankruptcy probability, including market size, past stock returns, and the idiosyncratic standard deviation of stock returns. I propose a model that uses a combination of accounting ratios and market-driven variables to produce more accurate out-of-sample forecasts than alternative models.
Overview
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Verification
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Citations
Cites
FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCY
Altman, E. I. (1968) · The Journal of Finance · doi:10.1111/j.1540-6261.1968.tb00843.x · Cited by 14,888
Journal of Economic Literature
(2019) · AEA Papers and Proceedings · doi:10.1257/pandp.109.633 · Cited by 7,468
Cox, D. R., & Oakes, D. (2018) · Chapman & Hall/CRC eBooks · doi:10.1201/9781315137438 · Cited by 6,234
Financial Ratios and the Probabilistic Prediction of Bankruptcy
Ohlson, J. A. (1980) · Journal of Accounting Research · doi:10.2307/2490395 · Cited by 5,989
Methodological Issues Related to the Estimation of Financial Distress Prediction Models
Zmijewski, M. E. (1984) · Journal of Accounting Research · doi:10.2307/2490859 · Cited by 2,888
Modeling Term Structures of Defaultable Bonds
Duffie, D., & Singleton, K. J. (1999) · Review of Financial Studies · doi:10.1093/rfs/12.4.687 · Cited by 2,542
The Econometric Analysis of Transition Data
Lancaster, T. (1990) · Cambridge University Press eBooks · doi:10.1017/ccol0521265967 · Cited by 2,097
Why Do Companies Go Public? An Empirical Analysis
Pagano, M., Panetta, F., & Zingales, L. (1998) · The Journal of Finance · doi:10.1111/0022-1082.25448 · Cited by 1,863
Economic duration data and hazard functions
Kiefer, N. M. (1988) · Journal of Economic Literature · Cited by 1,845
ZETATM analysis A new model to identify bankruptcy risk of corporations
Altman, E. I., Haldeman, R. G., & Narayanan, P. (1977) · Journal of Banking & Finance · doi:10.1016/0378-4266(77)90017-6 · Cited by 1,811
Cited by
Environmental externalities and cost of capital
Chava, S. (2014) · Management Science · doi:10.1287/mnsc.2013.1863 · Cited by 1,851
Economic consequences of the Sarbanes–Oxley Act of 2002
Zhang, I. X. (2007) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2007.02.002 · Cited by 801
CEO optimism and forced turnover
Campbell, T. C., Gallmeyer, M., Johnson, S. A., Rutherford, J., & Stanley, B. W. (2011) · Journal of Financial Economics · doi:10.1016/j.jfineco.2011.03.004 · Cited by 784
Bankruptcy Prediction with Industry Effects
Chava, S., & Jarrow, R. A. (2004) · Review of Finance · doi:10.1093/rof/8.4.537 · Cited by 784
Affiliated firms and financial support: Evidence from Indian business groups
Gopalan, R., Nanda, V., & Seru, A. (2007) · Journal of Financial Economics · doi:10.1016/j.jfineco.2006.09.008 · Cited by 719
Metadata
- Authors
- Shumway, T.
- Venue
- The Journal of Business
- Publisher
- University of Chicago Press
- Published
- 2001-01
- Volume
- 74
- Issue
- 1
- Pages
- 101-124
- ISSN
- 0021-9398 (ISSN-L)
- 1537-5374
- OpenAlex
- W3125168868
- Cited by
- 2,646
- References
- 18
- FWCI
- 139.47
- Type
- journal article
- Language
- en
- Open access
- green
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
How to cite
Cite CoChat for the checks on this page, and the paper for its own findings.
- This page
- CoChat. (2026). Citation check: Forecasting Bankruptcy More Accurately: A Simple Hazard Model. https://app.cochat.ai/papers/10.1086/209665
- The paper
- Shumway, T. (2001). Forecasting Bankruptcy More Accurately: A Simple Hazard Model. The Journal of Business. https://doi.org/10.1086/209665
Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
