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1 – 10 of 227
Open Access
Article
Publication date: 15 September 2017

Grace W.Y. Wang, Zhisen Yang, Di Zhang, Anqiang Huang and Zaili Yang

This study aims to develop an assessment methodology using a Bayesian network (BN) to predict the failure probability of oil tanker shipping firms.

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Abstract

Purpose

This study aims to develop an assessment methodology using a Bayesian network (BN) to predict the failure probability of oil tanker shipping firms.

Design/methodology/approach

This paper proposes a bankruptcy prediction model by applying the hybrid of logistic regression and Bayesian probabilistic networks.

Findings

The proposed model shows its potential of contributing to a powerful tool to predict financial bankruptcy of shipping operators, and provides important insights to the maritime community as to what performance measures should be taken to ensure the shipping companies’ financial soundness under dynamic environments.

Research limitations/implications

The model and its associated variables can be expanded to include more factors for an in-depth analysis in future when the detailed information at firm level becomes available.

Practical implications

The results of this study can be implemented to oil tanker shipping firms as a prediction tool for bankruptcy rate.

Originality/value

Incorporating quantitative statistical measurement, the application of BN in financial risk management provides advantages to develop a powerful early warning system in shipping, which has unique characteristics such as capital intensive and mobile assets, possibly leading to catastrophic consequences.

Details

Maritime Business Review, vol. 2 no. 3
Type: Research Article
ISSN: 2397-3757

Keywords

Open Access
Article
Publication date: 18 October 2023

Ivan Soukal, Jan Mačí, Gabriela Trnková, Libuse Svobodova, Martina Hedvičáková, Eva Hamplova, Petra Maresova and Frank Lefley

The primary purpose of this paper is to identify the so-called core authors and their publications according to pre-defined criteria and thereby direct the users to the fastest…

Abstract

Purpose

The primary purpose of this paper is to identify the so-called core authors and their publications according to pre-defined criteria and thereby direct the users to the fastest and easiest way to get a picture of the otherwise pervasive field of bankruptcy prediction models. The authors aim to present state-of-the-art bankruptcy prediction models assembled by the field's core authors and critically examine the approaches and methods adopted.

Design/methodology/approach

The authors conducted a literature search in November 2022 through scientific databases Scopus, ScienceDirect and the Web of Science, focussing on a publication period from 2010 to 2022. The database search query was formulated as “Bankruptcy Prediction” and “Model or Tool”. However, the authors intentionally did not specify any model or tool to make the search non-discriminatory. The authors reviewed over 7,300 articles.

Findings

This paper has addressed the research questions: (1) What are the most important publications of the core authors in terms of the target country, size of the sample, sector of the economy and specialization in SME? (2) What are the most used methods for deriving or adjusting models appearing in the articles of the core authors? (3) To what extent do the core authors include accounting-based variables, non-financial or macroeconomic indicators, in their prediction models? Despite the advantages of new-age methods, based on the information in the articles analyzed, it can be deduced that conventional methods will continue to be beneficial, mainly due to the higher degree of ease of use and the transferability of the derived model.

Research limitations/implications

The authors identify several gaps in the literature which this research does not address but could be the focus of future research.

Practical implications

The authors provide practitioners and academics with an extract from a wide range of studies, available in scientific databases, on bankruptcy prediction models or tools, resulting in a large number of records being reviewed. This research will interest shareholders, corporations, and financial institutions interested in models of financial distress prediction or bankruptcy prediction to help identify troubled firms in the early stages of distress.

Social implications

Bankruptcy is a major concern for society in general, especially in today's economic environment. Therefore, being able to predict possible business failure at an early stage will give an organization time to address the issue and maybe avoid bankruptcy.

Originality/value

To the authors' knowledge, this is the first paper to identify the core authors in the bankruptcy prediction model and methods field. The primary value of the study is the current overview and analysis of the theoretical and practical development of knowledge in this field in the form of the construction of new models using classical or new-age methods. Also, the paper adds value by critically examining existing models and their modifications, including a discussion of the benefits of non-accounting variables usage.

Details

Central European Management Journal, vol. 32 no. 1
Type: Research Article
ISSN: 2658-0845

Keywords

Open Access
Article
Publication date: 24 August 2020

Giuseppe Festa, Matteo Rossi, Ashutosh Kolte and Luca Marinelli

This research investigates the top five pharmaceutical companies in India to determine whether their financial structures are sound and if they face the risk of bankruptcy

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Abstract

Purpose

This research investigates the top five pharmaceutical companies in India to determine whether their financial structures are sound and if they face the risk of bankruptcy, highlighting the potential contribution of intellectual capital (IC) to financial stability.

Design/methodology/approach

The analysis outlines operating ratios, profitability ratios, possibility of bankruptcy (through Z-scores) and attractiveness of the financial structure (through the F-score), with consequent focus on (IC).

Findings

The financial structure of the selected companies seems stable. Changes in the Indian pharmaceutical scenario, above all, regarding the patent system, will force the companies to consider the impact of IC carefully.

Practical implications

Indian pharmaceutical companies need sustainability and development, with increasing focus on patent issues. To enhance innovation capabilities and overcome international competition, they should redesign their business orientation towards IC, mainly when impacting patents.

Originality/value

Using established approaches for predicting potential bankruptcy, this study focuses on the financial performance of top Indian pharmaceutical companies. IC can support financial stability, and this study provides further perspectives for managing their financial structure, both statically and dynamically.

Details

Journal of Intellectual Capital, vol. 22 no. 2
Type: Research Article
ISSN: 1469-1930

Keywords

Open Access
Article
Publication date: 29 September 2022

Angel Barajas, Victor Krakovich and Félix J. López-Iturriaga

In this paper, the authors study the failure of Russian banks between 2012 and 2019.

Abstract

Purpose

In this paper, the authors study the failure of Russian banks between 2012 and 2019.

Design/methodology/approach

The authors analyze the entire population of Russian banks and combine a logit model with the survival analysis.

Findings

In addition to the usual determinants, the authors find that not-failed banks have higher levels of fulfillment of the Central Bank requirements of solvency, liquidity, provide fewer loans to their shareholders and own more shares of other banks. The results of this study suggest an asymmetric effect of the strategic orientation of banks: whereas the proportion of deposits from firms is negatively related to the probability of failure, the loans to firms are positively related to bankruptcies. According to this research, the fact of being controlled by a foreign bank has a significant negative relationship with the likelihood of failure and moderates the effect of bank size, performance and growth on the bankruptcy likelihood.

Practical implications

On the whole, the results of this study support the new Central Bank rules, but show that the thresholds imposed by the Russian regulator actually do not make a difference between failed and not failed banks in the short and medium term.

Originality/value

The authors specially focus on the effectiveness of new rules issued by the Central Bank of Russia in 2013.

Details

European Journal of Management and Business Economics, vol. 32 no. 3
Type: Research Article
ISSN: 2444-8451

Keywords

Open Access
Article
Publication date: 17 November 2023

Olof Wadell and Anna Bengtson

The purpose of this study is to develop a model of a starting situation for relationship initiation in turbulent business networks.

Abstract

Purpose

The purpose of this study is to develop a model of a starting situation for relationship initiation in turbulent business networks.

Design/methodology/approach

The study is designed as an extreme single case study that takes its point of departure in a company’s bankruptcy in the Swedish automotive industry.

Findings

This study illustrates how a new business relationship can start from a resource combination previously controlled by one actor (i.e. a single company) in a turbulent business network, thereby bringing nuances to the common understanding that new relationships start in stable business networks where resource combinations are developed between actors in established business relationships.

Originality/value

Previous studies have stated that the development of a mutual orientation between actors leads to the formation of a business relationship. The business relationship then leads to resource adaptations between the two companies. The developed model, however, illustrates that this pattern can be reversed in situations of turbulence. Hence, previously adapted resources might lead to the formations of a business relationship. Based on this observation, the authors argue that there are reasons to question if previous models of business relationship initiation and development in business networks are adequately equipped for analysis in turbulent business networks.

Details

Journal of Business & Industrial Marketing, vol. 39 no. 13
Type: Research Article
ISSN: 0885-8624

Keywords

Open Access
Article
Publication date: 10 November 2020

Evrim Hilal Kahya, Hüseyin Yiğit Ersen, Cumhur Ekinci, Oktay Taş and Koray D. Simsek

The paper aims to identify the differences between developed and developing country firms with respect to firm-specific and country-level determinants of their capital structure…

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Abstract

Purpose

The paper aims to identify the differences between developed and developing country firms with respect to firm-specific and country-level determinants of their capital structure. For this purpose, all constituent firms in one of the oldest Islamic equity indices, Dow Jones Islamic Market World Index (DJIM), are considered and the Muslim-majority status of each firm's domicile country is recognized.

Design/methodology/approach

The study employs Hausman–Taylor random effects regression with endogenous covariates to explain the debt ratios of firms in DJIM by separating them into developed and developing country subsamples in an unbalanced panel data setting. Developing country subsample is further split into two based on the Muslim-majority status of each firm's domicile country.

Findings

Consistent with the previous literature, this study finds that firm-specific characteristics are the main determinants of their capital structure. Additionally, the paper shows that country-level characteristics have an impact on the debt ratio, however, the types of factors vary across developed and developing countries. Debt ratios in developing country firms are lower than those in developed country firms, largely due to the significantly smaller leverage ratios of firms in Muslim-majority countries. Although the debt ratios of DJIM firms are higher in “non-Muslim” countries, the set of firm-level capital structure determinants are not statistically explained by operating in a “Muslim” country. The study also documents that, before the global financial crisis of 2008, companies in developing countries have gradually become less leveraged worldwide.

Originality/value

This paper provides a new perspective into the differences between developed and developing country firms' capital structures by focusing on a relatively homogeneous data set restricted by leverage screening rules of an Islamic equity index and recognizing the Muslim-majority status of each firm's domicile country.

Details

Journal of Capital Markets Studies, vol. 4 no. 2
Type: Research Article
ISSN: 2514-4774

Keywords

Open Access
Article
Publication date: 17 June 2021

Angelo Paletta and Genc Alimehmeti

This paper aims to analyze the ex ante and ex post economic efficiency of the preventive agreement (concordato preventivo) or composition with creditors as defined by the Italian…

Abstract

Purpose

This paper aims to analyze the ex ante and ex post economic efficiency of the preventive agreement (concordato preventivo) or composition with creditors as defined by the Italian Bankruptcy Law. This study examines four possible outcomes of the procedure: homologation (confirmation); the degree of dissent/consent of creditors; the revocation, admissibility or inadmissibility; the declaration of the company bankruptcy in preventive agreement.

Design/methodology/approach

This paper uses data from 728 Italian companies which filed for preventive agreement in 2016. In reference to each of the four possible outcomes, this study applies nine logit regressions to analyze the effects of a series of efficiency variables ex ante (corporate-based drivers) and ex post (procedure-based drivers).

Findings

Results show the relevance of the debt structure, ownership structure and virtuous behavior, corporate governance and management systems, as well as effectivity of the court control on the preventive agreement outcome.

Originality/value

This paper draws on original data of bankruptcy in Italy and gives empirical evidence of the ex ante and ex post factors on the outcomes of the preventive agreement.

Details

International Journal of Law and Management, vol. 64 no. 1
Type: Research Article
ISSN: 1754-243X

Keywords

Open Access
Article
Publication date: 5 December 2023

Carlotta Magri and Pier Luigi Marchini

This study aims to investigate the link between audit quality and in-court debt restructuring. The aim is to understand whether the confirmation of debt restructuring plans is…

Abstract

Purpose

This study aims to investigate the link between audit quality and in-court debt restructuring. The aim is to understand whether the confirmation of debt restructuring plans is affected by audit quality, which, in the light of agency theory, reduces information asymmetries between outsiders (creditors and the court) and insiders (shareholders and managers) of the debtor company.

Design/methodology/approach

A logistic regression is performed to test whether higher audit quality is associated with an increased probability of successfully completing a debt restructuring proceeding (RP). Consistent with the literature, audit quality is assessed ex ante based on auditor size, which is used as a proxy for independence. The analysis considers private Italian companies.

Findings

Audit quality positively affects debt restructuring. Among financially distressed companies, those audited by an audit company are more likely to succeed in RPs than those audited by a single practitioner. There is no evidence of a Big N effect.

Originality/value

This study fills a gap in literature as, in contrast to other financial and governance characteristics, audit quality has never been studied before as a determinant of efficient restructuring. It contributes to the literature on auditing and governance by highlighting the importance of audit quality in complex situations such as RPs, and it expands on debt restructuring literature by considering the importance of the information exchanged during RPs.

Details

Managerial Auditing Journal, vol. 39 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

Open Access
Article
Publication date: 10 May 2023

Marko Kureljusic and Erik Karger

Accounting information systems are mainly rule-based, and data are usually available and well-structured. However, many accounting systems are yet to catch up with current…

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Abstract

Purpose

Accounting information systems are mainly rule-based, and data are usually available and well-structured. However, many accounting systems are yet to catch up with current technological developments. Thus, artificial intelligence (AI) in financial accounting is often applied only in pilot projects. Using AI-based forecasts in accounting enables proactive management and detailed analysis. However, thus far, there is little knowledge about which prediction models have already been evaluated for accounting problems. Given this lack of research, our study aims to summarize existing findings on how AI is used for forecasting purposes in financial accounting. Therefore, the authors aim to provide a comprehensive overview and agenda for future researchers to gain more generalizable knowledge.

Design/methodology/approach

The authors identify existing research on AI-based forecasting in financial accounting by conducting a systematic literature review. For this purpose, the authors used Scopus and Web of Science as scientific databases. The data collection resulted in a final sample size of 47 studies. These studies were analyzed regarding their forecasting purpose, sample size, period and applied machine learning algorithms.

Findings

The authors identified three application areas and presented details regarding the accuracy and AI methods used. Our findings show that sociotechnical and generalizable knowledge is still missing. Therefore, the authors also develop an open research agenda that future researchers can address to enable the more frequent and efficient use of AI-based forecasts in financial accounting.

Research limitations/implications

Owing to the rapid development of AI algorithms, our results can only provide an overview of the current state of research. Therefore, it is likely that new AI algorithms will be applied, which have not yet been covered in existing research. However, interested researchers can use our findings and future research agenda to develop this field further.

Practical implications

Given the high relevance of AI in financial accounting, our results have several implications and potential benefits for practitioners. First, the authors provide an overview of AI algorithms used in different accounting use cases. Based on this overview, companies can evaluate the AI algorithms that are most suitable for their practical needs. Second, practitioners can use our results as a benchmark of what prediction accuracy is achievable and should strive for. Finally, our study identified several blind spots in the research, such as ensuring employee acceptance of machine learning algorithms in companies. However, companies should consider this to implement AI in financial accounting successfully.

Originality/value

To the best of our knowledge, no study has yet been conducted that provided a comprehensive overview of AI-based forecasting in financial accounting. Given the high potential of AI in accounting, the authors aimed to bridge this research gap. Moreover, our cross-application view provides general insights into the superiority of specific algorithms.

Details

Journal of Applied Accounting Research, vol. 25 no. 1
Type: Research Article
ISSN: 0967-5426

Keywords

Open Access
Article
Publication date: 10 June 2022

Xinyi Huang, Fei Teng, Yu Xin and Liping Xu

This paper aims to study the effect of the establishment of bankruptcy courts on bond issuance market. This paper helps to predict that the introduction of bankruptcy courts in…

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Abstract

Purpose

This paper aims to study the effect of the establishment of bankruptcy courts on bond issuance market. This paper helps to predict that the introduction of bankruptcy courts in China can mitigate price distortions caused by the implicit government guarantees and promote the development of the high-risk bond market.

Design/methodology/approach

This paper exploits the staggered introduction of bankruptcy courts across cities to implement a differences-in-differences strategy on bond issuance data. Using bonds issued in China between 2018 and 2020, the impact of bankruptcy courts on the bond issuance market can be analyzed.

Findings

This paper reveals that bond issuance credit spreads increase and is more sensitive to firm size, profitability and downside risk of issuance entity after the introduction of bankruptcy courts. It also reveals a substantive increase in bond issuance quantity and a decrease in issuer credit ratings following the establishment of bankruptcy courts. In addition, the increase of credit spreads is more prominent for publicly traded bonds, those whose issuers located in provinces with lower judicial confidence, bonds issued by SOEs and bonds with stronger government guarantees. Finally, the role of bankruptcy courts is more pronounced in regions with higher marketization.

Originality/value

This paper relates to previous studies that investigate the impact of laws and institutions on external financing. It helps provide new evidence to this literature on how improvements of efficiency and quality in bankruptcy enforcements relate to the marketization of bond issuance. The results provide further evidence on legal institutions and bond financing.

Details

China Accounting and Finance Review, vol. 24 no. 3
Type: Research Article
ISSN: 1029-807X

Keywords

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