A combined approach based on robust PCA to improve bankruptcy forecasting

2019 ◽  
Vol 18 (2) ◽  
pp. 296-320 ◽  
Author(s):  
Marianna Succurro ◽  
Giuseppe Arcuri ◽  
Giuseppina Damiana Costanzo
Keyword(s):  
Financial Distress ◽  
Design Methodology ◽  
Statistical Approach ◽  
Principal Component ◽  
Skewed Data ◽  
Z Score ◽  
Combined Approach ◽  
Robust Pca ◽  
Content Type ◽  
Practical Implications

Purpose Starting from a series of financial ratios analysis, this paper aims to build up two indices which take into account both the firm’s debt level and its sustainability to investigate if and to what extent the proposed indices are able to correctly predict firms’ financial bankruptcy probabilities. Design/methodology/approach The research implements a statistical approach (tandem analysis) based on both an original use of principal component analysis (PCA) and logit model. Findings The econometric results are compared with those of the popular Altman Z-score for different lengths of the reference period and with more recent classifiers. The empirical evidence would suggest a good performance of the proposed indices which, therefore, could be used as early warning signals of bankruptcy. Practical implications The potential application of the model is in the spirit of predicting bankruptcy and aiding companies’ evaluation with respect to going-concern considerations, among others, as the early detection of financial distress facilitates the use of rehabilitation measures. Originality/value The construction of the indebtedness indices is based on an original use of Robust PCA for skewed data.

The impact of corporate social responsibility on financial distress: evidence from developing economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Farooq ◽  
Amna Noor
Keyword(s):  
Corporate Social Responsibility ◽  
Financial Distress ◽  
Z Score ◽  
Socially Responsible ◽  
Content Type ◽  
Financial Firms ◽  
Responsible Behavior ◽  
Corporate Social ◽  
The Impact ◽  
Practical Implications

Purpose This study aims to explore the role of corporate social responsibility (CSR) on the likelihood of financial distress for a sample of 139 Pakistan Stock Exchange (PSX) listed firms throughout 2008–2019. Design/methodology/approach The dynamic generalized method of moments (GMM) estimator is used to examine the impact of CSR on financial distress. The investment in CSR is measured through a multidimensional financial approach which comprises the sum of the contribution made by the company in the form of charitable donation, employees’ welfare and research and development, while the Altman Z-score is used as an indicator of financial distress. The higher the Z-score, the lower will be the probability of financial distress. Findings The authors find a significant positive impact of CSR on financial distress in GMM model. This finding is consistent with the shareholder view and over-investment hypothesis of CSR as management makes an investment in CSR to get personal benefits, which resultantly leads the firm toward financial distress state. Further, this positive relationship remains present for firms having strong involvement in foreign business through exports. Research limitations/implications Like other studies, the present study is not free from limitations. First, financial firms are skipped from the sample, although literature witnesses a lot of studies highlight the financial firms’ commitment to achieving CSR goals. Second, financial distress occurs in different stages, and this study fails to establish a linkage between CSR engagement at different stages of financial distress. In the future, researchers can make valuable addition by covering these missing links in present studies. Practical implications Findings suggest several practical implications. For policymakers, they should encourage firms to adopt more socially responsible behavior as it not only prevents them from distress but also comes with better investment behavior, minimize bankruptcies and make economies more strong and stable. Second, results suggest corporate managers emphasize socially responsible behavior as its benefits are beyond the “societal benefits” as it lessens financial distress through lower cost of debt, lesser financial constraints and reduced cost of information asymmetry, and it minimizes the cost of capital. Lastly, investors make risk premium assessments related to future earnings by determining the likelihood of financial distress in the future. Originality/value The study extends the body of existing literature on CSR and the likelihood of financial distress in Pakistan, which is according to the best knowledge of the authors, not yet studied before. The results suggest that policymakers may pay special attention to the quality of CSR while predicting corporate financial distress.

Mixed Brazilian Cerrado fruits preserves without added sugar: the effect of bodying agents

2019 ◽  
Vol 121 (9) ◽  
pp. 1969-1981 ◽  
Author(s):  
Taísa Rezende Teixeira Farias ◽  
Maria Cecília Evangelista Vasconcelos Schiassi ◽  
Patrícia Aparecida Pimenta Pereira ◽  
Vanessa Rios de Souza ◽  
Amanda Maria Teixeira Lago ◽  
...  
Keyword(s):  
Design Methodology ◽  
Principal Component ◽  
Physicochemical Characteristics ◽  
Research Data ◽  
Regression Equations ◽  
Brazilian Cerrado ◽  
Added Sugar ◽  
Content Type ◽  
High Concentrations ◽  
Practical Implications

Purpose The purpose of this paper is to evaluate the effect of the bodying agents (erythritol, sorbitol, xylitol and polydextrose) and their mixtures on the preparation of mixed Brazilian Cerrado fruit preserves (marolo, soursop and sweet passion fruit). Design/methodology/approach The simplex mixture design was used for product optimization and the preserves evaluated by physical, physicochemical and sensory properties. The research data were analyzed using regression equations on SAS University and exploratory analysis by principal component analysis and parallel factors techniques on Sensomaker software. Findings The results show that erythritol and polydextrose bodying agents should not be used as pure components because they provoked changes in the properties of the final product and negatively influenced the sensory attributes. While the high concentrations of xylitol and sorbitol provided better sensorial acceptance, being considered, therefore, good substitutes for sucrose. Practical implications This research has shown it is feasible to use bodying agents in the preparation of mixed Brazilian Cerrado fruit preserves without added sugar. Social implications The development of mixed preserves could increase population access to the Brazilian Cerrado fruits. In addition, sugar-free preserves are a viable alternative for adding value to the product and satisfy all the consumers. Originality/value The combination of properties of two or more fruits and use of bodying agents can improve sensory, physical and physicochemical characteristics of the final product. However, there are technological challenges to evaluate in the preparation of mixed Brazilian Cerrado fruit preserves without added sugar.

Satisfaction level and competitiveness in subsistence small businesses

2018 ◽  
Vol 56 (5) ◽  
pp. 1108-1121 ◽  
Author(s):  
Carlos M. Jardón
Keyword(s):  
Small Businesses ◽  
Design Methodology ◽  
Principal Component ◽  
Competitive Advantages ◽  
Satisfaction Level ◽  
Content Type ◽  
Wood Processing ◽  
Maximum Benefit ◽  
Manova Analysis ◽  
Practical Implications

Purpose Subsistence small businesses (SSBs) do not seek the maximum benefit; they only seek a benefit that enough satisfies their basic needs. In consequence, a dual behaviour of companies is expected and possibly the competitiveness of these companies is different. The purpose of this paper is to study the dual behaviour of SSBs and the differences about their competitive advantages. Design/methodology/approach Data were obtained by conducting surveys with owners and managers of wood processing companies located in a region of Misiones (Argentina). The results were checked by interviews in 2012 and 2015. The research uses principal component analysis and K-means to classify the different behaviour and MANOVA analysis to study the relationships. Findings The findings suggest two types of SSBs and show that competitive advantages are different into two groups of companies. Research limitations/implications The data used refer to a certain period of time, with interviews in next periods. Sample is in a particular region and sector and generalisations should be done carefully. The variables are measured with subjective questions. Practical implications The findings suggest instruments to change the strategy of unsatisfied SSBs to grow. Social implications The growth of SSBs is very important in poorest areas. The paper suggest governments’ politics that facilitate a stable environment for improving competitiveness of SSBs. Originality/value SSBs are very important in developing countries, but they are not sufficiently studied. The research shows the importance of satisfying principle in the competitiveness of subsistence entrepreneurs.

Stock market flexibility during COVID-19 pandemic: evidence from Pakistan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ume Kalsoom ◽  
Sheheryar Javed ◽  
Rizwan Ullah Khan ◽  
Arif Maqsood
Keyword(s):  
Stock Market ◽  
Financial Distress ◽  
Design Methodology ◽  
Foreign Currency ◽  
Stock Index ◽  
Content Type ◽  
Daily Data ◽  
Gold Market ◽  
The Impact ◽  
Practical Implications

PurposeThe authors examine the impact of coronavirus disease 2019 (COVID-19) pandemic on the stock market, forex market and gold market of Pakistan.Design/methodology/approachBy using the daily data of COVID-19 confirmed cases, stock index, foreign currency rates and gold prices for the period 10 March 2020 to 16 October 2020, the authors explore that the stock index negatively responds to the corona pandemic.FindingsAdditionally, the authors observe the price hikes in gold and foreign currency corresponding to the number of COVID-19 positive cases.Practical implicationsThe study analysis unveils that the stock market adversely responds to a pandemic, whereas, forex and gold markets serve as a safe haven for investors at the time of financial distress.Originality/valueThis study complements the literature and provides empirical evidence of the stock market, the gold market and foreign currency market, in the perspective of Pakistan.

Seasonal variation in urban tourist satisfaction

2018 ◽  
Vol 73 (3) ◽  
pp. 344-358 ◽  
Author(s):  
Daniela Soldić Frleta ◽  
Dora Smolčić Jurdana
Keyword(s):  
Design Methodology ◽  
Principal Component ◽  
Regression Analyses ◽  
Content Type ◽  
Tourist Satisfaction ◽  
City Tourism ◽  
Level Of Satisfaction ◽  
Significant Difference ◽  
The City ◽  
Practical Implications

Purpose The purpose of this study is to detect the differences in satisfaction levels with regard to different elements of the city tourism offering during the season and off-season. Furthermore, the aim is to find out what factors determine the satisfaction of season and off-season tourists. Design/methodology/approach This paper is based on the results of a survey conducted during 2016 in Opatija and Rijeka (Croatia). The analyses were conducted on a sample of 1,249 respondents. Data analysis included principal component analyses, ANOVA and series of regression analyses. Findings Results confirmed that there is a significant difference in overall satisfaction, as well as in all five satisfaction dimensions, between tourists visiting the cities during the season and those visiting in the pre- and post-season. In addition, simple regression analyses revealed that tourists staying in those cities during the peak season expressed a statistically significant higher level of satisfaction than those visiting in the pre- and post-season. However, no statistically significant difference was found in overall satisfaction and in four out of five satisfaction dimensions, between pre- and post-season tourists. Practical implications The findings have relevant implications for destination managers in their further decisions aimed at developing a more satisfactory tourism offering in the season and off-season. Originality/value The main contribution of this paper lies in the connection between tourist satisfaction and the season of their visit, as previous studies have rarely considered the season when analysing tourist satisfaction with the destination offering.

Identifying Industry 4.0 IoT enablers by integrated PCA-ISM-DEMATEL approach

2019 ◽  
Vol 57 (8) ◽  
pp. 1784-1817 ◽  
Author(s):  
Shubhangini Rajput ◽  
Surya Prakash Singh
Keyword(s):  
Industry 4.0 ◽  
Design Methodology ◽  
Principal Component ◽  
Integrated Approach ◽  
Interpretive Structural Modeling ◽  
Content Type ◽  
Effective Implementation ◽  
Network Capability ◽  
First Time ◽  
Practical Implications

Purpose The purpose of this paper is to identify, analyze and model Internet of Things (IoT) enablers essential for the success of Industry 4.0. Design/methodology/approach IoT enablers for Industry 4.0 are identified from literature and inferable discussions with industry experts. Three different techniques namely, principal component analysis (PCA), interpretive structural modeling (ISM) and decision making trial and evaluation laboratory (DEMATEL) are applied to model IoT enablers. In addition to this, DEMATEL is also applied under two different situations representing the behavioral characteristic of experts involved. These are termed as optimistic (maximum) and pessimistic (minimum). Findings The integrated approach of PCA-ISM-DEMATEL shows that IoT ecosystem and IoT Big Data are the most influential or driving IoT enablers. These two enablers have been identified as the pillars for Industry 4.0. On the other side, IoT interchangeability, consumer IoT, IoT robustness and IoT interface and network capability have also been identified as the most dependent enablers for Industry 4.0. Practical implications The findings enable the industry practitioners to select the most appropriate driving enablers for an effective implementation of Industry 4.0. Originality/value The integrated approach-based hierarchical model and cause-effect relationship among IoT enablers are proposed which is a novel initiative for Industry 4.0. Moreover, two different variants of DEMATEL namely, pessimistic and optimistic are applied first time.

scholarly journals Measuring financial inclusion: a composite FI index for the developing countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thi Truc Huong Nguyen
Keyword(s):  
Developing Countries ◽  
Design Methodology ◽  
Principal Component ◽  
Financial Inclusion ◽  
Analysis Method ◽  
Content Type ◽  
Secondary Sources ◽  
Sustainable Economic Growth ◽  
Practical Implications

PurposeThe purpose of this paper is to focus on measuring financial inclusion (FI) level for the developing countries.Design/methodology/approachBy using a two-stage principal component analysis method, we construct a composite FI index to measure the degree of FI. Data are collected through secondary sources including World Bank and IMF reports for the period 2012–2018.FindingsWe have built an overall FI index which is considered as a comprehensive measure of FI, a useful tool for policymaking and policy evaluation. Comparison with other studies shows that our FI index corroborates with them.Practical implicationsBuilding a good FI measurement method is important for developing countries. It helps to assess and compare the level of FI of each country and between countries together, made easily and accurately.Originality/valueThis study emphasizes the important role of FI in the economy. From there, an FI solution is integrated into the construction and calculation of its impact on other factors. This will help policymakers to take effective measures to increase FI levels to achieve sustainable economic growth.

scholarly journals Understanding millennials’ tourism experience: values and meaning to travel as a key for identifying target clusters for youth (sustainable) tourism

2018 ◽  
Vol 4 (1) ◽  
pp. 31-42 ◽  
Author(s):  
Elena Cavagnaro ◽  
Simona Staffieri ◽  
Albert Postma
Keyword(s):  
Design Methodology ◽  
Sustainable Tourism ◽  
Principal Component ◽  
Research Strategy ◽  
Value Orientations ◽  
Content Type ◽  
Longitudinal Approach ◽  
Tourism Experience ◽  
Principal Component Analyses ◽  
Practical Implications

Purpose The purpose of this paper is to better understand the tourism experience of millennials by connecting their value orientations to the meaning that they give to travel. In doing so, it also aims at discovering profiles of young tourists that can be targeted both now and in the future by tourism organisations. Design/methodology/approach A survey based on validated scales reached 423 Dutch millennials. An integrated multidimensional research strategy has been applied where models that reduce the gathered data to fewer components (principal component analyses) were followed by a cluster analysis. Findings Ten value orientations (Schwartz, 1994) and four travel meanings have been identified. By combining these ten value orientations and four meanings, nine clusters have been identified representing groups of millennial tourists with different needs. For example, while two clusters fit into the popular description of young travellers seeking only unpretentious enjoyment, millennials represented in two other clusters are strongly motivated by self-transcending values, distance themselves from the travel meaning escapism and relaxation and will therefore not positively respond to a merely hedonic travel offer. Research limitations/implications Replication of this research is recommended in other national contexts, possibly using a longitudinal approach. Practical implications The nine clusters should be approached with a dedicated travel offer. In particular, at least two clusters of millennials may be successfully approached with a sustainable tourism offer. Originality/value The combination of value orientations and travel meanings portrays a detailed and realistic picture of the tourism experience looked for by millennials.

Biases in construction project dispute resolution

2019 ◽  
Vol 26 (2) ◽  
pp. 321-348 ◽  
Author(s):  
Sai On Cheung ◽  
Keyao Li
Keyword(s):  
Factor Analysis ◽  
Dispute Resolution ◽  
Design Methodology ◽  
Construction Project ◽  
Principal Component ◽  
Principal Component Factor Analysis ◽  
Content Type ◽  
Confirmatory Factor ◽  
Research Gap ◽  
Practical Implications

PurposeThis study aims to propose a framework of bias in construction project dispute resolution (CPDR hereafter).Design/methodology/approachWith reference to the literatures on effects of bias, manifestations of bias in CPDR were developed. Based on data obtained from construction professionals about their frequency of having these bias manifestations, the underlying constructs of biased behaviors were explored by a principal component factor analysis. A confirmatory factor analysis was further conducted to validate the framework of bias in CPDR.FindingsFour types of bias were identified as the constructs that underlie biased behaviors in CPDR. These four biases were included in the bias framework proposed: preconception, self-affirmation, optimism and interest-oriented. The potency of these types of bias was also evaluated.Practical implicationsFirst, the findings inform that the existence of bias in CPDR is real. Early detection allows management to intervene and steer CPDR team back to rational courses. Second, this study suggests optimizing CPDR procedures to diminish the chance of bias occurring.Originality/valueBias is almost an uncharted area in CPDR. The study fills this research gap by conceptualizing the underlying constructs of biased behaviors. The findings inform construction professionals of the likelihood of practicing biased behaviors in CPDR. Repeated dispute decisions in the commonly used multi-tiered dispute resolution process would enable the creeping in of biases.

Consumer value creation through WhatsApp use

2019 ◽  
Vol 32 (4) ◽  
pp. 455-471
Author(s):  
Jorge Cruz-Cárdenas ◽  
Jorge Guadalupe-Lanas ◽  
Ekaterina Zabelina ◽  
Andrés Palacio-Fierro ◽  
Margarita Velín-Fárez ◽  
...  
Keyword(s):  
Latin American ◽  
Value Creation ◽  
Emotional Support ◽  
Design Methodology ◽  
Instant Messaging ◽  
Role Performance ◽  
Content Type ◽  
Consumer Value ◽  
Depth Interviews ◽  
Practical Implications

Purpose The purpose of this paper is to understand in-depth how consumers create value in their lives using WhatsApp, the leading mobile instant messaging (MIM) application. Design/methodology/approach The study adopts the perspective of customer-dominant logic (CDL) and uses a qualitative multimethod design involving 3 focus groups and 25 subsequent in-depth interviews. The research setting was Ecuador, a Latin American country. Findings Analysis and interpretation of the participants’ stories made it possible to identify and understand the creation of four types of value: maintaining and strengthening relationships; improving role performance; emotional support; and entertainment and fun. In addition, the present study proposes a conceptual model of consumer value creation as it applies to MIM. Practical implications Understanding the way consumers create value in their lives using MIM is important not only for organizations that offer MIM applications, but also for those companies that develop other applications for mobile phones or for those who wish to use MIM as an electronic word-of-mouth vehicle. Originality/value The current study is one of the first to address the topic of consumer behavior in the use of technologies from the perspective of CDL; this perspective enables an integrated qualitative vision of value creation in which the consumer is the protagonist.

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