A Comparison on Leading Methodologies for Bankruptcy Prediction: The Case of the Construction Sector in Lithuania

Gintare Giriūniene, Lukas Giriūnas, Mangirdas Morkūnas and Laura Brucaite
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Gintare Giriūniene: Faculty of Economics and Business Administration, Vilnius university, Vilnius 10222, Lithuania
Lukas Giriūnas: Faculty of Economics and Business, Mykolas Romeris university, Vilnius 08303, Lithuania
Laura Brucaite: Faculty of Economics and Business, Mykolas Romeris university, Vilnius 08303, Lithuania

Economies, 2019, vol. 7, issue 3, 1-20

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.

Keywords: bankruptcy prediction models; construction sector (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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