<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The aim of the present article is to model and predict the financial failure of non-financial companies listed on the Bucharest Stock Exchange. The prediction models are based on the companies’ financial reports. The paper emphasizes the importance of processing outlier data and the significance of categorical independent variables. The paper contributes to bankruptcy and corporate financial failure research by presenting a Romanian situation. Results show that the model that uses 3-year financial data prior to the failure has a better accuracy. Several models have been compared, and it was found that using categorical independent variables as explanatory variables increased the accuracy of the models against those that used numerical regressors.</p></abstract>

The aim of the present article is to model and predict the financial failure of non-financial companies listed on the Bucharest Stock Exchange. The prediction models are based on the companies’ financial reports. The paper emphasizes the importance of processing outlier data and the significance of categorical independent variables. The paper contributes to bankruptcy and corporate financial failure research by presenting a Romanian situation. Results show that the model that uses 3-year financial data prior to the failure has a better accuracy. Several models have been compared, and it was found that using categorical independent variables as explanatory variables increased the accuracy of the models against those that used numerical regressors.

Modelling the Financial Failure of Romanian Stock Companies

Sapientia Hungarian University of Transylvania

IPHD in Regional Development, Faculty of Business and Economics

Institute of Finance and Accounting, Faculty of Economic Science

Acta Universitatis Sapientiae, Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Modelling the Financial Failure of Romanian Stock Companies"}

The aim of the present article is to model and predict the financial failure of non-financial companies listed on the Bucharest Stock Exchange. The prediction...

Modelling the Financial Failure of Romanian Stock Companies

Published Online: Dec 16, 2019

Page range: 65 - 82

DOI: https://doi.org/10.1515/auseb-2019-0005

Keywords
corporate failure prediction, parametric modelling, non-parametric modelling, bankruptcy

© 2019 Gergely Fejér-Király et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Modelling the Financial Failure of Romanian Stock Companies

Published Online: Dec 16, 2019

Page range: 65 - 82

DOI: https://doi.org/10.1515/auseb-2019-0005

Keywordscorporate failure prediction, parametric modelling, non-parametric modelling, bankruptcy

© 2019 Gergely Fejér-Király et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
corporate failure prediction, parametric modelling, non-parametric modelling, bankruptcy