Graduation Year

2024

Date of Submission

12-2023

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Nishant Dass

Abstract

This paper determines bankruptcy predictors during turbulent economic times for specific consumer facing industries. I specifically investigate the predictors of bankruptcy in the retail and hospitality industries as they are some of the most consumer-spending dependent sectors. I hypothesize that unprofitable, highly levered, and cash flow dependent companies in the retail and hospitality industries are more likely to go bankrupt even during turbulent economic conditions, such as the COVID-19 pandemic. The model used is a logistic regression along with numerous economic variable combinations, including solvency, liquidity, and profitability ratios. A sample of retail and hospitality (RH) firms and non-retail and non-hospitality (NRH) firms totalling 16,690 between 2017 and 2022 were identified from the COMPUSTAT database. The significance of the coefficients for each variable in the model was evaluated by using the t-statistic corresponding to each coefficient’s value. The overall models for RH and NRH are significant at a ∝‐level of 0.05.

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