Comparing the Modified Fulmer and Ohlson Models of Bankruptcy Prediction: Empirical Evidence from Iran

Prediction of corporate bankruptcy is a phenomenon of increasing interest to investors/creditors, borrowing firms, and governments alike. Timely identification of firms’ impending failure is indeed desirable. Nowadays, various models are used for bankruptcy prediction. The purpose of this study is to present the theoretical bases of the research and compare the results obtained firm applying the Modified Fulmer and Ohlson models for firm bankruptcy prediction. Thus, the data collected during the period 2001- 2010 were tested. Logistic regression and multiple discriminant analysis methods were applied for data analysis. The results suggest that Modified Fulmer and Ohlson models are able to predict bankruptcy of the firms accepted in Tehran Stock Exchange. Moreover, the Modified Ohlson model is more power in bankruptcy prediction than the Modified Fulmer model

Keywords:

Bankruptcy prediction models , Modified Ohlson Model , Modified Fulmer Model , multiple discriminant analysis