Earnings Retention as a Specification Mechanism in Logistic Bankruptcy Models: A Test of the Free Cash Flow Theory
结合自由现金流理论与逻辑破产模型，利用印度纺织业数据，发现基于投资机会的数据分类能提高破产预测精度，并验证了低增长企业应比高增长企业留存更少收益的结论。
This paper explores the applicability of as a specification mechanism to improve forecasting methods in corporate bankruptcy. The study combines lessons from Jensen's Free Cash Flow Theory with a logisitic model of bankruptcy to improve forecasting accuracy. The model uses data from the Indian textile industry to show that data classification based on investment opportunities is yet another way of improving precision. The study also re‐examines the Free Cash Flow Theory and concludes that in applying it to a bankruptcy scenario, its initial findings regarding retention policy hold true; that is, low growth firms should retain less of their earnings than their high growth counterparts.