American Journal of Economics and Business Administration

Retail Bankruptcy Prediction

Johnny Pang and Mark Kogel

DOI : 10.3844/ajebasp.2013.29.46

American Journal of Economics and Business Administration

Volume 5, Issue 1

Pages 29-46


This study reintroduces the famous discriminant functions from Edward Altman and Begley, Ming and Watts (BMW) that were used to predict bankrupts. We will formulate three new discriminant functions which differ from Altman’s and BMW’s re-estimated Altman model. Altman’s models as well as Begley, Ming and Watts’s re-estimated Altman model apply to publicly traded industries, whereas the new models formulated in this study are based on retail companies. The three new functions will provide better predictions on retail bankruptcy and they will minimize the chance of misclassifications.


© 2013 Johnny Pang and Mark Kogel. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.