Predicting bankruptcy in construction business: Traditional model validation and formulation of a new model

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216305%3A26510%2F19%3APU131782" target="_blank" >RIV/00216305:26510/19:PU131782 - isvavai.cz</a>

Result on the web

<a href="https://www.jois.eu/?505,en_predicting-bankruptcy-in-construction-business-traditional-model-validation-and-formulation-of-a-new-model" target="_blank" >https://www.jois.eu/?505,en_predicting-bankruptcy-in-construction-business-traditional-model-validation-and-formulation-of-a-new-model</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.14254/2071-8330.2019/12-1/19" target="_blank" >10.14254/2071-8330.2019/12-1/19</a>

Result language

angličtina

Original language name

Predicting bankruptcy in construction business: Traditional model validation and formulation of a new model

Original language description

When predicting bankruptcy of a company basing on its financial statements, the line of business in which the company is operating plays a significant role in terms of prediction accuracy. This accuracy is particularly crucial to banks and businesses which realise sales mostly on credit. The failure to recognise a client’s or business partner’s financial difficulties or the threat of bankruptcy with sufficient accuracy could lead to significant losses. Bankruptcy prediction models are used for these purposes. Most of the models created have been dedicated to the branch of manufacturing, while the branch of construction is relatively neglected by the mainstream literature. Traditional bankruptcy prediction models cannot be used effectively due to specifics of construction business. The aim of this paper is to test the current accuracies of five selected bankruptcy models in predicting the bankruptcy of construction companies. An additional aim is to create a new model designed specifically for this branch. The research was conducted on the sample of Czech companies. The method of Receiver Operating Characteristic was applied as the measure of accuracy for testing the models. The model created during the course of this research achieved an accuracy higher by 3.6 to 8 percent than the traditional models tested.

Czech name

—

Czech description

—

Type

J_SC - Article in a specialist periodical, which is included in the SCOPUS database

CEP classification

—

OECD FORD branch

50206 - Finance

Project

—

Continuities

S - Specificky vyzkum na vysokych skolach

Publication year

2019

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

JOURNAL OF INTERNATIONAL STUDIES

ISSN

2071-8330

e-ISSN

2306-3483

Volume of the periodical

12

Issue of the periodical within the volume

1

Country of publishing house

PL - POLAND

Number of pages

14

Pages from-to

283-296

UT code for WoS article

—

EID of the result in the Scopus database

999