Abstract:

The paper is focused on building a scoring model of corporate defaults in the Czech Republic on the basis of 800 thousands firms with 249 variables. Our research reveals many interesting new findings, which are connected with business efficiency and stability. The crucial role of information has been approved, as firms with  no  economic information  are  much  more  prone  to  default.  A  legal  form  of business is very important indicator mainly for conservative investors. Current ratio has been determined as a key component, which is able to provide power distinction only on the basis of one value between good and bad firms. VAT payers are much stable  then  non-VAT  payers,  who are  3  times  riskier.  Final  model  has  more  than 80 % performance, and it is able to distinct between financially healthy and “bad” firms with high probability. Quality and robustness of our findings are supported by biggest database of corporate information in the Czech Republic.