The Liquidation/Merger Alternative: Some New Evidence Available to Purchase

Since the seminal work of Altman (1968), a large number of researchers have developed statistical models, derived from accounting data, with the aim of predicting corporate failure as evidenced by the event of “bankruptcy”. Such models are now apparently widely and successfully used by credit/investment analysts as an aid to assessing corporate viability (see Altman 1983; Taffler, 1984). However, an area which has received little attention in the management literature, but one of much import to the analyst, is whether it is possible to discriminate between those financially distressed firms which fail, and those where a timely merger appears to serve as a viable alternative to corporate bankruptcy.