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Bankruptcy and Financial Distress Prediction in the Mobile Telecom Industry
Blekinge Institute of Technology, School of Management.
2010 (English)Independent thesis Advanced level (degree of Master (Two Years))Student thesis
Abstract [en]

Background and Problem Discussion: Signs of eminent business failure are usually evident long before official bankruptcy of any form, be it re-organization or liquidation. A number of methods have been developed over the years to assess the financial health of corporations, either using financial ratios directly or using bankruptcy prediction models based on grounded financial theories and ratios. Purpose: The purpose of this thesis is to test Altman’s Z-score prediction model using sample data from the mobile telecommunication industry in Ghana. Method: Quantitative and qualitative approach based on ‘modified single case’ design. Primary data was collected using questionnaire survey methods, whiles secondary data were mainly sourced from company annual financial reports, industry regulators and industry analysts’ reports. Theory: The theory section reviewed past bankruptcy literature and compared their strengths, weaknesses and use in research. Marketing strategies for emerging markets at the base of the economic pyramid was also discussed alongside the relationship between corporate governance and corporate failure. Analysis: The data was analysed using descriptive statistics, z-score analysis, financial ratio analysis and trending. Key solvency ratios were compared with industry averages. The z-scores were compared with z-scores of other companies that went bankrupt in the past. Corporate governance scores were compared to scores suggested by other researchers as strong indicators of good corporate governance. Conclusion: The research findings confirmed the strength and ability of the z-score model in predicting eminent business failure as it predicted accurately the distress positions of the case companies. It also confirmed the correlation between corporate governance and corporate failure. Finally, companies operating in BOP markets ought to adopt and adapt the myriads of marketing strategies available, especially for mobile telecommunication operators, in order to be able to compete effectively and earn positive average margin per user (AMPU) in the midst of declining average revenue per user (ARPU) in the region.

Place, publisher, year, edition, pages
2010. , p. 60
Keywords [en]
Bankruptcy prediction models, Multivariate Discriminant Analysis, Financial Distress, Financial Ratio, Corporate Failure, Corporate Governance, Telecommunication Competition
National Category
Business Administration Telecommunications
Identifiers
URN: urn:nbn:se:bth-4683Local ID: oai:bth.se:arkivex6220C84CF827480EC12577340049504BOAI: oai:DiVA.org:bth-4683DiVA, id: diva2:832030
Uppsok
Social and Behavioural Science, Law
Supervisors
Available from: 2015-04-22 Created: 2010-05-31 Last updated: 2015-06-30Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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