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Does recasted data improve the predictive accuracy of bankruptcy prediction models?

Olofsson, Patrik LU and Berntsson, Philip (2017) BUSN79 20171
Department of Business Administration
Abstract
This paper examines conventional bankruptcy prediction models under the thesis that such models perform better when applied to adjusted financial statement data, rather than to reported data. This hypothesis is tested by revisiting already existing bankruptcy models as well as developing two new models for predicting imminent corporate failures. The result of the study reveals that financial adjustments are not necessary for conventional bankruptcy prediction models, whereas such adjustments lead to improved predictive accuracy for our models. So even though the necessity of using recasted financials in other areas of finance is generally accepted, we find that this necessity is not as apparent within the field of bankruptcy prediction.
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author
Olofsson, Patrik LU and Berntsson, Philip
supervisor
organization
course
BUSN79 20171
year
type
H1 - Master's Degree (One Year)
subject
keywords
Bankruptcy prediction model, reported financial data, adjusted financial data, off-balance sheet debt, bankruptcy prediction accuracy
language
English
id
8922182
date added to LUP
2017-09-08 13:12:37
date last changed
2017-09-08 13:12:37
@misc{8922182,
  abstract     = {This paper examines conventional bankruptcy prediction models under the thesis that such models perform better when applied to adjusted financial statement data, rather than to reported data. This hypothesis is tested by revisiting already existing bankruptcy models as well as developing two new models for predicting imminent corporate failures. The result of the study reveals that financial adjustments are not necessary for conventional bankruptcy prediction models, whereas such adjustments lead to improved predictive accuracy for our models. So even though the necessity of using recasted financials in other areas of finance is generally accepted, we find that this necessity is not as apparent within the field of bankruptcy prediction.},
  author       = {Olofsson, Patrik and Berntsson, Philip},
  keyword      = {Bankruptcy prediction model,reported financial data,adjusted financial data,off-balance sheet debt,bankruptcy prediction accuracy},
  language     = {eng},
  note         = {Student Paper},
  title        = {Does recasted data improve the predictive accuracy of bankruptcy prediction models?},
  year         = {2017},
}