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Comparing logit model with discriminant analysis for predicting
bankruptcy in Portuguese hospitality sector

 

José Manuel Pereira1 , Mário Basto2 and Amélia Ferreira das Silva3*

 

Received: 25/08/2015 Accepted: 25/07/2016

 

1Polytechnic Institute of Cávado and Ave, Accounting Department, CICF
2Polytechnic Institute of Cávado and Ave, Sciences Department
3Polytechnic of Porto, CEPESE, CEOS, Rua Jaime Lopes Amorim, s/n, 4465-004 S. Mamede de Infesta, Fax: +351229025899; E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
*Corresponding author

 

Abstract
 

Portugal’s tourism sector is on permanent expansion and contributes significantly to the Portuguese economy. However, it has been facing the problem of business failure. The main goal of this paper is to develop an econometric and a multivariate model for forecasting business failure in the hospitality industry using logit and discriminant analysis. The present paper does not explore the causes of business failure but rather aims to propose a model that may help anticipate failure, so that decision makers can minimize the negative effects of this phenomenon. The results confirm that the models for forecasting business failure contribute positively to setting macroeconomic policies and tourism development support programs and are relevant for investors, stockholders, and decision makers.

 

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Keywords: Business failure, prediction models, discriminant analysis, logit, tourism.

 

Citation: Pereira, J., M. Basto and A. Silva (2017) Comparing logit model with discriminant analysis for predicting bankruptcy in Portuguese hospitality sector. European Journal of Tourism Research 16 pp. 276-280

 

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European Journal of Тourism Research