Modelling the Financial Failure of Romanian Stock Companies

Gergely Fejér-Király; Norbert Ágoston; József Varga

doi:10.1515/auseb-2019-0005

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Modelling the Financial Failure of Romanian Stock Companies

Acta Universitatis Sapientiae, Economics and Business

Volume 7 (2019): Issue 1 (December 2019)

By: Gergely Fejér-Király, Norbert Ágoston and József Varga

Open Access

|Dec 2019

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.

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Articles in this issue

DOI: https://doi.org/10.1515/auseb-2019-0005 | Journal eISSN: 2360-0047 (formerly 2343-8894)

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Language: English

Page range: 65 - 82

Published online: Dec 16, 2019

Published in print: Dec 1, 2019

Published by: Sapientia Hungarian University of Transylvania

In partnership with: Paradigm Publishing Services

Publication frequency: 1 issue per year

Keywords:

corporate failure prediction,

parametric modelling,

non-parametric modelling,

bankruptcy

JEL:

G33 – bankruptcy,

liquidation

Related subjects:

Business and economics,

Political economics,

Economic theory, systems and structures

© 2019 Gergely Fejér-Király, Norbert Ágoston, József Varga, published by Sapientia Hungarian University of Transylvania
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Volume 7 (2019): Issue 1 (December 2019)