ABSTRACT
In the previous three chapters the models of failure risk have an implicit assumption that the relationship between failure risk and the explanatory variables is independent of the stage reached by the firm on its path to failure. Under this assumption one is able to treat the firm-years as independent cases. This was the situation in the logit model formulation employed in Chapters 4, 5 and 6. Although exploratory in nature, these chapters developed models in their own right and so were informative about the possible comparative effects of the internal ratios and the external economy on failure risk, as well as the means of examining these effects together.
