Accuracy of Models Predicting Corporate Bankruptcy in a Selected Industry Branch
Accuracy of Models Predicting Corporate Bankruptcy in a Selected Industry Branch

Summary/Abstract: The paper's main aim is an accuracy verification of dozens models predicting financial distress. The evaluated models were created in the past in developed countries and especially in transition economies. High probability of bankruptcy does not affect only an ailing enterprise itself but it also influences other business related entities or counterparties and therefore the results provided by models predicting financial distress have their serious usage as scoring models. Models predicting financial distress help the decision making process by predicting future development of selected business entities. Research hypotheses are based on the idea that already existing models predicting financial distress still have enough explanatory power and accuracy for decision making and there is no need for the creation of a new one. The research should answer the question which models should nowadays be recommended the most for practical use. The paper uses for the verification tools such as Type I Error, Type II Error, ROC Curves and related AuROC coefficients.

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