The potential of dynamic indicator in development of the bankruptcy prediction models: the case of construction companies
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Date
2017-04-28
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Mark
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Mendel University Press
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Abstract
The current development of bankruptcy models usually goes in the direction of testing different
classification algorithms, while the potential hidden in financial indicators is given less attention.
Their analysis is often only restricted to the comparison between their respective statuses in bankrupt
and healthy companies, while the dynamics of the indicators, i.e. the change in their values in time,
is not paid much attention. The aim or our research is to analyse partial potential of financial ratios
for predicting bankruptcy. Twentyeight indicators were examined in a sample of 1,355 construction
companies operating in the Czech Republic, as well as their development over the past five periods.
A nonparametric chisquare test was used to evaluate the significance of predictors. The variables
were categorised for the application of the test. Our research confirmed the assumption as to
the importance of using the indicators in dynamic (change) form. Indicators that are significant only
in their change form were identified. Moreover, the use of the dynamic form of the indicators can
increase the significance of the bankruptcy model. This was tested by using the stepwise version of
linear discrimination analysis.
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Citation
Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis. 2017, vol. 65, issue 2, p. 641-652.
https://acta.mendelu.cz/65/2/0641/
https://acta.mendelu.cz/65/2/0641/
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Peer-reviewed
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en
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Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
http://creativecommons.org/licenses/by-nc-nd/4.0/