Using fundamental, market and macroeconomic variables to predict financial distress : a study of companies listed on the Johannesburg Stock Exchange

This study presents a three-stage approach in determining financial distress of companies listed on the Johannesburg Stock Exchange. A novel feature of the present study is that it deviates from a binary classification of corporate distress prediction to present a multinomial outcome where the model predicts distressed, depressed and healthy companies. The research results show an improvement in the prediction accuracy rate when fundamental data is combined with market-based data. However, the further addition of macroeconomic indicators does not enhance the prediction accuracy.This manuscript is based on S.W.S.’s PhD thesis, submitted at the University of Pretoria. L.M.B. was the supervisor while J.H.H. and H.P.W. were co-supervisors. (http://hdl.handle.net/2263/60519)https://www.jefjournal.org.zaam2018Financial Managemen