Financial ratio selection for business crisis prediction

Fengyi Lin, Deron Liang, Enchia Chen

Research output: Contribution to journalArticlepeer-review

57 Scopus citations

Abstract

Recent research has used financial ratios to establish the diagnosis models for business crises. This research explores a broader coverage of financial features, namely the recommended financial ratios from TEJ (Taiwan Economic Journal) database in addition to those financial ratios studied in prior literature. The aim of this research is to discover potentially useful but previously unaware financial features for better prediction accuracy. In this study, we had applied data mining techniques to identify five useful financial ratios, which two of them, tax rates and continuous four quarterly EPS are previously unaware to the research community. Our empirical experiment indicates that our proposed feature set outperforms those models proposed by prior scholars in terms of the prediction accuracy.

Original languageEnglish
Pages (from-to)15094-15102
Number of pages9
JournalExpert Systems with Applications
Volume38
Issue number12
DOIs
StatePublished - Nov 2011

Keywords

  • Feature selection
  • Financial prediction
  • Financial predictors (variables)
  • SVM

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