Being an outlier: a company non-prosperity sign?

• Authors: Lucia Svabova , Marek Durica

Abstracts

EN

Research background: The state of financial distress or imminent bankruptcy are very difficult situations that the management of every company wants to avoid. For these reasons, prediction of company bankruptcy or financial distress has been recently in a focus of economists and scientists in many countries over the world. Purpose of the article: Various financial indicators, mostly financial ratios, are usually used to predict the financial distress. In order to create a strong prediction model and a statistically significant prediction of bankruptcy, it is advisable to use a deep statistical analysis of the data. In this paper, we analysed the real financial ratios of Slovak companies from the year 2017. In the phase of data preparation for further analysis, we checked the existence of outliers and found that there are some companies that are multivariate outliers because are significantly different from other companies in the database. Thus, we deeply focused on these outlying companies and analysed whether to be an outlier is a sign of financial distress. Methods: We analysed whether there are much more non-prosperous companies in the set of outlier companies and if their financial indicators are significantly different from those of the prosperous companies. For these analyses, we used testing of the statistical hypotheses, such as the test for equality of means and chi-square test. Findings & Value added: The ratio of non-prosperous companies between the outliers is significantly higher than 50 % and the attributes of non-prosperity and being an outlier are dependent. The means of almost all financial ratios of prosperous and non-prosperous companies among outliers are significantly different.

Keywords

EN

bankruptcy prediction models; financial ratios; failure prediction; financial distress

• Publisher: Instytut Badań Gospodarczych
• Journal: Equilibrium. Quarterly Journal of Economics and Economic Policy
• Year: 2019
• Volume: 14
• Issue: 2
• Pages: 359-375

Dates

published

2019

Contributors

author

Lucia Svabova

• University of Zilina

• https://orcid.org/0000000247224103

author

Marek Durica

• University of Zilina

• https://orcid.org/000000022118166X

Identifiers

DOI

10.24136/eq.2019.017

Biblioteka Nauki

22446412