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

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

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

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

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

Popis výsledku anglicky

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.

Druh

J_SC - Článek v periodiku v databázi SCOPUS

CEP obor

—

OECD FORD obor

50206 - Finance

Projekt

—

Návaznosti

S - Specificky vyzkum na vysokych skolach

Rok uplatnění

2019

Kód důvěrnosti údajů

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

Název periodika

JOURNAL OF INTERNATIONAL STUDIES

ISSN

2071-8330

e-ISSN

2306-3483

Svazek periodika

12

Číslo periodika v rámci svazku

1

Stát vydavatele periodika

PL - Polská republika

Počet stran výsledku

14

Strana od-do

283-296

Kód UT WoS článku

—

EID výsledku v databázi Scopus

999