Abstract
Different economic environments differ in their characteristics; this prevents the usage of the same bankruptcy prediction models under different conditions. Objectively, the abundance of bankruptcy prediction models gives rise to the idea that these models are not in compliance with the changing business conditions in the market and do not meet the increasing complexity of business tasks. The purpose of this study is to assess the suitability of existing bankruptcy prediction models and the possibilities to increase the effectiveness of their application. In order to analyze theoretical aspects of the application of bankruptcy forecasting models and frame the research methodology, a systemic comparative and logical analysis of the scientific literature and statistical data, graphic data representation, induction, deduction and abstraction are employed. Results of the analysis confirm research hypotheses that bankruptcy prediction models based on macroeconomic variables are effective in identifying the number of corporate bankruptcies in a country and that the application of the model created on the grounds of macroeconomic indicators together with the traditional bankruptcy prediction model can improve the reliability of bankruptcy prediction. However, it was identified that models which are not specially adapted to companies in the construction sector are also suitable for forecasting their bankruptcies.
Highlights
The abundance of scientific literature reveals the necessity for a reliable, precise and relevant bankruptcy prediction model
Considering the research objective, the following hypotheses were set: H1 : Bankruptcy prediction models based on macroeconomic variables are efficient in identifying the number of corporate bankruptcies in the country; H2 : Models that are not specially adapted to companies in the construction sector are not suitable for forecasting the bankruptcy of these types of companies; H3 : The application of a model created on the grounds of macroeconomic indicators together with the traditional bankruptcy prediction model improves the reliability of bankruptcy prediction
The hypothesis stating that the application of a model created on the grounds of macroeconomic indicators together with the traditional bankruptcy prediction model can improve the reliability of bankruptcy prediction can be supported
Summary
The abundance of scientific literature reveals the necessity for a reliable, precise and relevant bankruptcy prediction model. Alaka et al (2018), Schonfeld et al (2018), Svabova and Kliestik (2018), and Slefendorfas (2016) believe that the traditional bankruptcy prediction models are not suited to analyzing modern enterprises because the dynamic macroeconomic environment and business are interdependent. The scientific literature and statistical trends show that the issue of minimizing the trends of an increasing number of bankruptcies in Lithuania is becoming especially relevant and, in this context, the necessity emerges of identifying ways to improve the reliability of bankruptcy prediction models, given changing economic circumstances. The objective of this research is to assess the efficiency of the application of bankruptcy prediction models to companies in the construction sector using macroeconomic indicators
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