Predicting Bankruptcy via Induction

Authors

Thomas E. Mckee

Document Type

Research Article

Abstract

Research has consistently shown that auditors disclose going-concern problems for less than 50% of all business failures. As evidenced by widespread litigation, investors and creditors believe that this performance needs to be improved. This paper reports on research which analysed financial data for 60 public companies via an inductive inferencing algorithm. The end result was a simple and theoretically consistent model that was 97% accurate in predicting bankruptcy. Auditors, investors and creditors may find the model useful in improving their bankruptcy prediction capability.

DOI

10.1177/026839629501000104

Recommended Citation

Mckee, Thomas E. (1995) "Predicting Bankruptcy via Induction," Journal of Information Technology: Vol. 10: Iss. 1, Article 4.
DOI: 10.1177/026839629501000104
Available at: https://aisel.aisnet.org/jit/vol10/iss1/4