Dynamic Evaluation of Business Distress Risk Using Hazard Model

Using non-paired sample, this paper applies logistic discrete-time hazard model to dynamically evaluate risk of company\´s business distress within the context of its industry. The results show sigma of company\´s stock returns, ownership concentration, company\´s size and assets-liabilities ratio are significantly related to business distress risk. By comparing the distressed company group and the healthy company group, we find among them, there exit significant difference in the dynamic behavior of survival rate and hazard rate. This graph display method can be used to predict "the likely time to distress".