SMEs probability of default: the case of the hospitality sector
In this paper we analyze a set of financial ratios from hospitality sector SMEs in order to ascertain which factors determine a greater probability of default. We choose the hospitality sector due to its importance in the Portuguese economy and has been particularly affected by the recent econom...
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| Main Author: | |
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| Format: | Article |
| Language: | English |
| Published: |
University of Algarve, ESGHT/CINTURS
2015-01-01
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| Series: | Tourism & Management Studies |
| Subjects: | |
| Online Access: | https://tmstudies.net/index.php/ectms/article/view/770/1300 |
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| Summary: | In this paper we analyze a set of financial ratios from hospitality
sector SMEs in order to ascertain which factors determine a greater
probability of default. We choose the hospitality sector due to its
importance in the Portuguese economy and has been particularly
affected by the recent economic downturn and austerity measures
and because, to the best of our knowledge, this sector has never
been the object of such a study. Usually the literature seeks to find a
set of variables which are significant in the estimation of default
and multiple discriminant analysis and logit methodology are the
main avenues of research on this area. Our data was collected from
SABI and we followed logit methodology. Our results recommend
that in ascertaining the creditworthiness of borrowers only debt
and equity variables appear to be relevant to explaining failure, and
overreliance on profit as an indication of good financial
performance should be limited. The main reason for our rather
poor results could be from problems with the data quality, possibly
since the accounts published by firms aren’t reliable and tend to
present negative results. |
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| ISSN: | 2182-8466 |