Corporate failure prediction in the construction and real estate industries: General versus industry-focused models

Abstract

This paper looks at the advantages of industry-focused versus general models to better predict corporate failure. The results confirm that profitability, stock turnover, leverage, liquidity, size, business growth, age, and general economic conditions are determinants of the failure, but there are differences between industries. In addition, it is found that a specific model estimation has similar predictive power than a general one in the construction industry, while that is not the case in the real estate industry