The Use of Cash Flow Statement in Predicting Business Failure: Evidence From an Emerging Market

Authors : Ahmet ÖZCAN

Pages : 373-387

Doi:10.35408/comuybd.633337

View : 18 | Download : 8

Publication Date : 2020-03-23

Article Type : Research Paper

Abstract :In the competitive economic environment, cash flow statement reveals prominent information about firms. The aim of the present study is to examine the usefulness of cash flow statement in the prediction of business failure by using a sample including 66 firms listed on Borsa Istanbul from 2010 to 2018. A total of 33 non-failed firms are matched with 33 failed firms based on size and industry. In the present study, logistic regression models are constructed for each of three years prior to business failure. The empirical findings of this study indicate that cash flow measures are strong predictors of business failure.
Keywords : Cash Flow Statement, Cash Flow Management, Business Failures, Financial Reporting