THE EFFECTIVENESS OF WILLIAMS METHOD IN DETERMINATION OF FACTORS AFFECTING FINANCIAL FAILURE: THE EXAMPLE OF BIST INDUSTRIAL BUSINESSES

Abstract

Today, the rapid developments and changes in the business world give rise to more intense competition than the past. While competitive market structure provides chance of survival to successful businesses only, financial failure or bankruptcy wait for those that fail to keep up with new market conditions. A business that terminates its operations due to a financial failure will adversely affect its managers, employees and competitors in micro terms, and its sector, investors, banks, lending institutions and consequently the national economy in macro terms. This fact clearly demonstrates the importance of studies that aim to determine financial failure. There are different approaches towards determining financial failure. Logistic regression analysis is one of the widely used methods. On the other hand, as trust towards model fit statistics and parameter estimates is not adequate in case of an overdispersion, the Williams method that provides solution by taking this situation into account is particularly effective in classifying volatile stock market data. The aim of this study is to determine the factors that affect the financial success of industrial businesses traded in BIST within 2019.Q2 period using logistic regression and the Williams methods.