A PN17 (Practice Note 17) company is a public company listed in Malaysian Stock Exchange that is financially distressed or does not have a core business or has failed to meet minimum capital or equity (less than 25% of the paid-up capital). As of 31st March 2018, there are still twenty-two (22) public listed companies classified under PN17. The general objective of this study is to investigate the relationship between the selected accounting ratios which as according to Altman’s model, liquidity, profitability, leverage, solvency and efficiency with the probability of corporate failure in Malaysian publicly listed firms. This study used a sample of fourteen (14) PN17 companies and a matched paired of fourteen (14) non-PN17 companies. The available financial data from 2013 until 2017 are collected from the library of Malaysian Stock Exchange and online database, the Thomson Reuter DataStream. This study concluded that Edward Altman model is a useful tool for investors to predict financial failure of public listed companies in Malaysia. The correlation results showed that the liquidity (working capital to total assets), profitability (retained earnings to total assets), leverage (earnings before interest and tax to total assets) as well as solvency (market value of equity to book value of debt) are found to be positively significant and good indicators of corporate failure in Malaysia. Based on the regression analysis, it was found out that the significant predictors of corporate failure in PN17 companies are liquidity and solvency while, in non-PN17 companies, the significant predictors are profitability and solvency.
