Abstract
The aim of this article is to prove the key role of the structure of the research sample used for accuracy determining on the accuracy of bankruptcy models. The creators of these models report the accuracy usually in the range of 60 to 90%. The authors of this article claim that these values are inaccurate and misleading. The real I. type error should be detected on a sample where obvious features of financial default were eliminated. The research tested more than 1200 of thriving businesses and also 270 businesses in future bankruptcy. The research has determined real current accuracy of selected three bankruptcy models on the standard sample of Czech businesses amounting 67.77%, 62.27% and 74.36%. This confirmed hypothesis no. 1, which says that actual accuracy of bankruptcy model is lower than original accuracy indicated by model makers. An accuracy of 58.70%, 61.59% and 65.94% was measured on a sample where businesses with obvious features of financial distress were eliminated. Due to the modification of the test sample, the order of accuracy has changed. This confirmed hypothesis no. 2. The Index of Karas and Reznakova reached the highest overall accuracy of 80.31% including incorrect prediction of bankruptcy also.
Highlights
The financial default can be considered both in a practical and legislative plane
The legislation on insolvency proceedings in the Czech Republic is governed by Act no. 182/2006 Coll., on Bankruptcy and Methods of Its Settlement, as amended
The article focuses on testing known bankruptcy models to determine their current accuracy
Summary
The financial default can be considered both in a practical and legislative plane. Statistical data from separate countries represent a number of insolvency proposals, their comparability can be weakened due to different legislation in particular countries.The legislation on insolvency proceedings in the Czech Republic is governed by Act no. 182/2006 Coll., on Bankruptcy and Methods of Its Settlement, as amended (hereinafter the Insolvency Act). The financial default can be considered both in a practical and legislative plane. Statistical data from separate countries represent a number of insolvency proposals, their comparability can be weakened due to different legislation in particular countries. The legislation on insolvency proceedings in the Czech Republic is governed by Act no. 182/2006 Coll., on Bankruptcy and Methods of Its Settlement, as amended (hereinafter the Insolvency Act). Insolvency Act was enacted on 1st January 2008 and replaced the previous regulation The solution of insolvency by means of legal proceedings is intended to match up the property relations of the debtor and creditors.
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