Abstract
Investors should carefully choose the investment to avoid the loss that delisted companies cause. This study aims to examine the factors associated with failures of Taiwan listed companies and help investors to make right decision. Beaver(1966) uses single financial ratio to predict company failure and that study is the first financial crisis study. Lane, Looney and Wansley(1986) apply Proportional Hazard Model to predict bank failure and compare it with multiple discriminate analysis. Hensler, Rutherford and Springer(1997) uses Accelerated Failure Time Model to analyze the factors influenced the survival time of listed companies. Hensler et al. and Lane et al. did not consider time varying covariate, therefore this study consider the effect of time varying covariate. In addition, this study takes all the companies that have listed as samples to meet the real situation of the population. The Cox Model, a survival analysis technique, is employed to examine the determinants of survival time of Taiwan listed companies. The samples of this study consist of 1,319 Taiwan listed companies from 1989 to 2009. This study divides all samples into electronics industry and non-electronics industry further. From the empirical results, we found that there is a significant and positive relation between the survival time of electronic industry firms and the three factors, including current ratio, cash flow ratio and return on asset；There is a significant and negative relation between the survival time of electronic industry firms and debt ratio. The survival time of non-electronic industry are affected by more factors and significantly and positively related to six factors, including size, current ratio, cash reinvestment ratio, return on asset, total asset turnover and corporate ownership ratio；The survival time of non-electronic industry are significantly and negatively related to debt ratio.