Default Prediction Using Neural Networks for Enterprises From the Post-Soviet Country

Fialová, Vendula; Folvarčná, Andrea

doi:10.26552/ems.2020.1.43-51

Cited by 10 publications

(11 citation statements)

References 15 publications

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“…The application of earnings management techniques reduces the explanatory power of financial statements, which on the one hand improves the company's position, but reduces the ability to predict future bankruptcy and increases the risk of bankruptcy (Fialova & Folvarcna, 2020). Empirical evidence regarding earnings management during the crisis varies; Lisboa and Kacharava (2018) revealed that the level of earnings management increased during the last financial crisis, while Papadaki and Tzovas (2017) found that companies in the sample of 19 European countries used accrual earnings management to a lesser extent during the financial crisis.…”

Section: Introductionmentioning

confidence: 99%

Does the life cycle affect earnings management and bankruptcy?

et al. 2021

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Research background: Deteriorating economic conditions and a negative outlook increase the pressure on financial management and the need to show high financial performance. According to Positive Accounting Theory, the growing risk of bankruptcy is associated with the phenomenon of earnings management. Bankruptcy risk and the quality of reported profits, along with other aspects of financial performance, vary throughout the company's life cycle. Nevertheless, these factors or their interactions are investigated only to a very small extent. Purpose of the article: The aim of this study is to clarify the impact of corporate life cycle and bankruptcy on earnings management, in order to describe behaviour of companies at different stages of corporate life cycle. Methods: A hierarchical mixed model with a random time and industry effect was chosen as appropriate because it allows the investigation of multilevel data that is not independent. The sample covers the financial indicators of more than 33,000 Central European companies from 2015?2019. The non-sequential Dickinson model, company age, and three models of accrual earnings management were used as proxies for the company's life cycle and quality of reported profit. Findings & value added: Earnings management and bankruptcy risk have a U-shape, indicating that financially distressed firms reduce reported accounting profit at the Introduction, Decline and, to a lesser extent, at the Growth stage. Slovak and Czech companies manipulate profits to a similar extent, Hungarian companies increase accounting profit to a greatest extent than the surveyed countries by controlling bankruptcy ? life cycle effect; however, the variability of accounting manipulations across industries has not been demonstrated. These findings imply that start-ups and declining businesses provide crooked financial statements to obtain more favourable debt covenants, and estimating discretionary accruals using life-cycle subsamples can improve the predictive power of accrual earnings management models.

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Section: Introductionmentioning

confidence: 99%

Does the life cycle affect earnings management and bankruptcy?

et al. 2021

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“…In addition to accrual-based earnings management, professional literature also distinguishes between real earnings management, which is typically influenced by corporate cash flow Kramarova et al (2014). Earnings management has a significant effect especially, on corporate economic performance, bankrupt or financial health as a whole (Grofcikova, 2020;Fialova & Folvarcna, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Earnings management: A bibliometric analysis

Vagner¹,

Valášková²,

Ďurana³

et al. 2021

Economics &Amp; Sociology

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“…On the stock exchange, a trader faces various types of risks such as financial risk, liquidity risk, company bankruptcy risk and many others. Therefore, an integral part of profitable trading is the effective identification of risks, their management and minimization of their potential impact [3][4][5][6].…”

Section: Analysis and Predictionmentioning

confidence: 99%

Analysis of trading volume and its use in prediction future price movements in the process of maximizing trading earnings

Chutka

Rebetak

2021

SHS Web of Conf.

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Research background: When we start looking for tools that could give a trader a certain trading advantage, we will certainly come across the problem of analysing the trading volume. This is an advanced type of analysis where the primary price chart of the underlying asset is not analysed, but traders focus on the volume of trades that have been executed at certain price levels. Although it may seem like an innovative method, this type of analysis has been used for several decades. In our article, we elaborated the theoretical basis of the analysis of trading volume as a tool for predicting the movement of prices of financial instruments. Purpose of the article: The aim of our article is to explore the possibilities, methods and procedures of analysis of trading volumes and the possibilities of their use in maximizing earnings from trading of financial instruments. Methods: We used formal methods such as analysis and synthesis of theoretical findings and others. Findings & Value added: Based on the study of the analysis and synthesis of theoretical data, we identified and described the possibilities of using the analysis of trading volume in the process of predicting the price movements of financial instruments. We consider the aim of the article to be fulfilled and we believe that it will be a valuable contribution in the field of research on this issue.

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Default Prediction Using Neural Networks for Enterprises From the Post-Soviet Country

Cited by 10 publications

References 15 publications

Does the life cycle affect earnings management and bankruptcy?

Does the life cycle affect earnings management and bankruptcy?

Earnings management: A bibliometric analysis

Analysis of trading volume and its use in prediction future price movements in the process of maximizing trading earnings

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