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Evaluation of the going‐concern status for companies: An ensemble framework‐based model

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  • Yu‐Feng Hsu
  • Wei‐Po Lee

Abstract

Issuing a going‐concern opinion is a difficult and complex task for auditors. The auditors have to take into account different critical factors in order to make the right decision based on information obtained from the auditing process. This study adopts the so‐called “random forest” approach (based on the ensemble method) to assist auditors in making such a decision. To investigate the corresponding effect of the proposed approach, we conduct a series of experiments and a performance comparison. The results show that the random forest method outperforms the baseline methods in terms of the accuracy rate, ROC area, kappa value, type II error, precision, and recall rate. The proposed approach is proven to be more accurate and stable than previous methods.

Suggested Citation

  • Yu‐Feng Hsu & Wei‐Po Lee, 2020. "Evaluation of the going‐concern status for companies: An ensemble framework‐based model," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 39(4), pages 687-706, July.
    • Handle: RePEc:wly:jforec:v:39:y:2020:i:4:p:687-706
    DOI: 10.1002/for.2653
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    References listed on IDEAS

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