A Study on the Prediction of Bankruptcy in the KOSDAQ Market

Abstract

Purpose This study looks into relations between bankruptcy prediction and the quality of accounting income in companies listed on the KOSDAQ. Design/Methodology/Approach With the use of a bankruptcy prediction model that has already been developed and applied;and with each company’s bankruptcy probability and financial stability score (P;Z-Score;K-Score);this study analyzes the relationship of bankruptcy probability to accounting income quality. Findings As a result;the higher a bankruptcy probability;the larger the value of discretionary accruals; the higher the value of the financial stability K-Score ;the lower the value of discretionary accruals; the higher a bankruptcy probability;the higher the level of conservatism; the higher the value of financial stability K-Score;the lower the level of conservatism. Research Implications or Originality The verification of relations with accounting income quality;the usability of the bankruptcy prediction model was proven. Bankruptcy probability P;and the financial stability scores Z-Score and K-Score were in the model sequentially;and comparative analysis was conducted.