Bankruptcy prediction: the influence of the year prior to failure selected for model building and the effects in a period of economic decline: Research Articles

Authors:
Paul P. M. Pompe;Jan Bilderbeek
Affiliations:
Department of Finance and Accounting, University of Twente, Enschede, The Netherlands;Department of Finance and Accounting, University of Twente, Enschede, The Netherlands
Venue:
International Journal of Intelligent Systems in Accounting and Finance Management
Year:
2005

Citing 0
Cited 3

Effects of feature construction on classification performance: An empirical study in bank failure prediction

Expert Systems with Applications: An International Journal
Intelligent technologies for investing: a review of engineering literature

Intelligent Decision Technologies
Predicting corporate bankruptcy using a self-organizing map: An empirical study to improve the forecasting horizon of a financial failure model

Decision Support Systems

Quantified Score

Hi-index	0.00

Visualization

Abstract

Using large amounts of data from small and medium-sized industrial firms, this study examines two aspects of bankruptcy prediction: the influence of the year prior to failure selected for model building and the effects in a period of economic decline. The results show that especially models generated from the final annual report published prior to bankruptcy were less successful in the timely prediction of failure. Furthermore, it was found that economic decline coincided with the deterioration of a model's performance. With respect to the methods used, we found that neural networks had a somewhat better overall performance than multiple discriminant analysis. Copyright © 2005 John Wiley & Sons, Ltd.