To Fail or Not to Fail: An Algorithm for SME Survival Prediction Using Accounting Data

José Manuel Pereira (), Humberto Ribeiro (), Amélia Silva () and Sandra Raquel Alves ()
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José Manuel Pereira: Management School
Humberto Ribeiro: University of Aveiro
Amélia Silva: Polytechnic Institute of Porto
Sandra Raquel Alves: Polytechnic Institute of Leiria

Chapter 5 in The Changing Role of SMEs in Global Business, 2020, pp 83-107 from Palgrave Macmillan

Abstract: Abstract In this book chapter, the very significant negative effects of the financial crisis were examined, in particular on micro and small and medium-sized enterprises (SMEs). An algorithm that has been constructed for predicting the survival likelihood of a corporation, using financial accounting data, is proposed here. Furthermore, due to the more common fragility of SMEs, the authors consider this algorithm as a possible tool for assessing their financial condition, providing an immediate insight about their survival odds and therefore helping management to better justify their decision-making processes, namely, the critical ones, driven to avoid business failure. Overall, the results suggest that the proposed algorithm is reliable while forecasting the survival likelihood of SMEs, based on their financial accounting reported data.

Keywords: SMEs; Algorithm; Survival prediction; Accounting data; Financial crisis (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pscchp:978-3-030-45835-5_5

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DOI: 10.1007/978-3-030-45835-5_5

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