Failure prediction of dotcom companies using neural network-genetic programming hybrids

  • Authors:
  • P. Ravisankar;V. Ravi;I. Bose

  • Affiliations:
  • Institute for Development and Research in Banking Technology, Castle Hills Road #1, Masab Tank, Hyderabad 500 057, AP, India;Institute for Development and Research in Banking Technology, Castle Hills Road #1, Masab Tank, Hyderabad 500 057, AP, India;School of Business, The University of Hong Kong, Room 730, Meng Wah Complex, Pokfulam Road, Hong Kong, China

  • Venue:
  • Information Sciences: an International Journal
  • Year:
  • 2010

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Abstract

This paper presents novel neural network-genetic programming hybrids to predict the failure of dotcom companies. These hybrids comprise multilayer feed forward neural network (MLFF), probabilistic neural network (PNN), rough sets (RS) and genetic programming (GP) in a two-phase architecture. In each hybrid, one technique is used to perform feature selection in the first phase and another one is used as a classifier in the second phase. Further t-statistic and f-statistic are also used separately for feature selection in the first phase. In each of these cases, top 10 features are selected and fed to the classifier. Also, the NN-GP hybrids are compared with MLFF, PNN and GP in their stand-alone mode without feature selection. The dataset analyzed here is collected from Wharton Research Data Services (WRDS). It consists of 240 dotcom companies of which 120 are failed and 120 are healthy. Ten-fold cross-validation is performed throughout the study. Results in terms of average accuracy, average sensitivity, average specificity and area under the receiver operating characteristic curve (AUC) indicate that the GP outperformed all the techniques with or without feature selection. The superiority of GP-GP is demonstrated by t-test at 10% level of significance. Furthermore, the results are much better than those reported in previous studies on the same dataset.