Data Envelopment Analysis of Corporate Failure for Non-Manufacturing Firms Using a Slacks-Based Measure

Workshop 2015 -Advances in DEA Theory and Applications (December 1-2, 2015)The problem of predicting corporate failure has intrigued many in the investment sector, corporate decision makers, business partners and many others, hence the intense research efforts by industry and academia. The majority of former research efforts on this topic focused on manufacturing companies with considerable assets commensurate with their size. But there is a dearth of publications on predicting non-manufacturing firms’ financial difficulties since these firms typically do not have significant assets or, indeed, any need for them as their work does not rely heavily on assets as a key variable. Our research shows that the slack-based measure (SBM) DEA model has obvious advantages in predicting corporate financial stress.The workshop is supported by JSPS (Japan Society for the Promotion of Science), Grant-in-Aid for Scientific Research (B), #25282090, titled “Studies in Theory and Applications of DEA for Forecasting Purpose.本研究はJSPS科研費 基盤研究(B) 25282090の助成を受けたものです