earticle

영어

The purposes of this paper is to analyze the usefulness of productivity indicators in corporate financial distress prediction using the sample of Korean manufacturing firms which failed during the period of 2000～2004. This study focuses on productivity indicators, since previous studies mainly examined various financial ratios which belong to profitability, liquidity, and financial structure and interest paying ability of firms as failure predictors. The main empirical results can be summarized as follows. First, the productivity indicators such as value added to sales, value added to total asssets, value added per employee, and current income per employee show significant differences in averages between failed and normal firms. Second, the correlation analysis between the dummy variable denoting failure status and productivity indicators show significant negative correlation as expected. Third, in the univariate logit analysis to predict corporate failure one year later, the model developed by each of productivity indicators predicts corporate failure correctly by 74.1～79.0%. Fourth, the performance of combined logit model including financial ratios and productivity indicators show improved predictive accuracy compared to the model including financial ratios only. What this paper contributes may be the examination of productivity indicators in the corporate financial distress prediction. Still, the test of various productivity indicators remains for further studies.