Abstract:
This study presents a three-stage approach in determining financial distress of companies
listed on the Johannesburg Stock Exchange. A novel feature of the present study is that it
deviates from a binary classification of corporate distress prediction to present a multinomial
outcome where the model predicts distressed, depressed and healthy companies. The research
results show an improvement in the prediction accuracy rate when fundamental data is
combined with market-based data. However, the further addition of macroeconomic indicators
does not enhance the prediction accuracy.