IDEAS home Printed from https://ideas.repec.org/a/vrs/auseab/v7y2019i1p65-82n5.html
   My bibliography  Save this article

Modelling the Financial Failure of Romanian Stock Companies

Author

Listed:
  • Fejér-Király Gergely

    (Sapientia Hungarian University of Transylvania (Cluj-Napoca, Romania) Department of Business Sciences)

  • Ágoston Norbert

    (IPHD in Regional Development, Faculty of Business and Economics, University of Pécs)

  • Varga József

    (Institute of Finance and Accounting, Faculty of Economic Science, Kaposvár University)

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.

Suggested Citation

  • Fejér-Király Gergely & Ágoston Norbert & Varga József, 2019. "Modelling the Financial Failure of Romanian Stock Companies," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 7(1), pages 65-82, December.
    • Handle: RePEc:vrs:auseab:v:7:y:2019:i:1:p:65-82:n:5
    DOI: 10.2478/eb-2019-0005
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/eb-2019-0005
    Download Restriction: no
    File URL: https://libkey.io/10.2478/eb-2019-0005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Yaghoob Maharati & Shamsodin Nazemi, 2012. "Entrepreneurial drives, organizational function, and success of Iranian entrepreneurs," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 2(2), pages 1-7.
    2. Peter B. Robinson & David V. Stimpson & Jonathan C. Huefner & H. Keith Hunt, 1991. "An Attitude Approach to the Prediction of Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 15(4), pages 13-32, July.
    3. M. Mohd Rosli & Rosman Mahmood, 2013. "Moderating Effects of Human Resource Management Practices and Entrepreneur Training on Innovation and Small-Medium Firm Performance," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 4(2), pages 60-69, May.
    4. Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mueller, Stephen L. & Thomas, Anisya S., 2001. "Culture and entrepreneurial potential: A nine country study of locus of control and innovativeness," Journal of Business Venturing, Elsevier, vol. 16(1), pages 51-75, January.
    2. Ingrid Verheul & Joern Block & Katrin Burmeister-Lamp & Roy Thurik & Henning Tiemeier & Roxana Turturea, 2015. "ADHD-like behavior and entrepreneurial intentions," Small Business Economics, Springer, vol. 45(1), pages 85-101, June.
    3. Heinrichs, Simon & Walter, Sascha, 2013. "Who Becomes an Entrepreneur? A 30-Years-Review of Individual-Level Research and an Agenda for Future Research," EconStor Preprints 68590, ZBW - Leibniz Information Centre for Economics.
    4. Martin G.A. Svensson, 2015. "When being wrong might be right: on overconfidence as an evolutionary mechanism of nascent entrepreneurs," Chapters, in: Charlie Karlsson & Urban Gråsjö & Sofia Wixe (ed.), Innovation and Entrepreneurship in the Global Economy, chapter 10, pages 237-258, Edward Elgar Publishing.
    5. Christophe Estay & François Durrieu & Manzoom Akhter, 2013. "Entrepreneurship: From motivation to start-up," Journal of International Entrepreneurship, Springer, vol. 11(3), pages 243-267, September.
    6. Desislava Yordanova & Jose António Filipe, 2018. "Desirability of Technology Entrepreneurship among Bulgarian STEM Students: The Role of Entrepreneurship Education," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 446-462.
    7. Muzychenko, Olga & Liesch, Peter W., 2015. "International opportunity identification in the internationalisation of the firm," Journal of World Business, Elsevier, vol. 50(4), pages 704-717.
    8. Ravindra Jain & Saiyed Wajid Ali, 2013. "Self-Efficacy Beliefs, Marketing Orientation and Attitude Orientation of Indian Entrepreneurs," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 22(1), pages 71-95, March.
    9. Gideon D. Markman & David B. Balkin & Robert A. Baron, 2002. "Inventors and New Venture Formation: the Effects of General Self–Efficacy and Regretful Thinking," Entrepreneurship Theory and Practice, , vol. 27(2), pages 149-165, April.
    10. Daniel Fonseca Costa & Francisval Carvalho & Bruno César Moreira & José Willer Prado, 2017. "Bibliometric analysis on the association between behavioral finance and decision making with cognitive biases such as overconfidence, anchoring effect and confirmation bias," Scientometrics, Springer;Akadémiai Kiadó, vol. 111(3), pages 1775-1799, June.
    11. Magnus Schückes & Tobias Gutmann, 2021. "Why do startups pursue initial coin offerings (ICOs)? The role of economic drivers and social identity on funding choice," Small Business Economics, Springer, vol. 57(2), pages 1027-1052, August.
    12. Dale, B.G. & Richardson, R. & Wright, D.M., 2001. "Triple inaugural address for the Rotating Chair for Research in Organisation and Management," ERIM Inaugural Address Series Research in Management EIA-2001-001-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam..
    13. Mesfin Mulu Ayalew & Shumet Amare Zeleke, 2018. "Modeling the impact of entrepreneurial attitude on self-employment intention among engineering students in Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 7(1), pages 1-27, December.
    14. T. K. Das & Bing-Sheng Teng, 1998. "Time and Entrepreneurial Risk Behavior," Entrepreneurship Theory and Practice, , vol. 22(2), pages 69-88, January.
    15. Grichnik, Dietmar & Smeja, Alexander & Welpe, Isabell, 2010. "The importance of being emotional: How do emotions affect entrepreneurial opportunity evaluation and exploitation?," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 15-29, October.
    16. Tan, Justin, 2001. "Innovation and risk-taking in a transitional economy: A comparative study of chinese managers and entrepreneurs," Journal of Business Venturing, Elsevier, vol. 16(4), pages 359-376, July.
    17. Jenny Lukito Setiawan & Azilah Kasim & Elia Ardyan, 2022. "Understanding the Consumers of Entrepreneurial Education: Self-Efficacy and Entrepreneurial Attitude Orientation among Youths," Sustainability, MDPI, vol. 14(8), pages 1-18, April.
    18. Opromolla, Luca David & Dell’Era, Michele & Santos-Pinto, Luis, 2018. "A General Equilibrium Theory of Occupational Choice under Optimistic Beliefs about Entrepreneurial Ability," CEPR Discussion Papers 13225, C.E.P.R. Discussion Papers.
    19. Leung, Aegean & Zhang, Jing & Wong, Poh Kam & Foo, Maw Der, 2006. "The use of networks in human resource acquisition for entrepreneurial firms: Multiple "fit" considerations," Journal of Business Venturing, Elsevier, vol. 21(5), pages 664-686, September.
    20. Das, Willy & Das, Satyasiba, 2018. "Role of Heuristic Principles On Crowd-Funder's Investment Decision Making," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 443-452, Governance Research and Development Centre (CIRU), Zagreb.

    More about this item

    Keywords

    corporate failure prediction; parametric modelling; non-parametric modelling; bankruptcy;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:auseab:v:7:y:2019:i:1:p:65-82:n:5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.