The Application of Corporate Governance Indicators With XBRL Technology to Financial Crisis Prediction

Chien-Kuo Li, Deron Liang, Fengyi Lin and Kwo-Liang Chen

Emerging Markets Finance and Trade, 2015, vol. 51, issue S1, S58-S72

Abstract: The widespread adoption of eXtensible Business Reporting Language (XBRL) suggests that intelligent software agents can now use financial information disseminated on the Web with high accuracy. Financial data have been widely used by researchers to predict financial crises; however, few studies have considered corporate governance indicators in building prediction models. This article presents a financial crisis prediction model that involves using a genetic algorithm for determining the optimal feature set and support vector machines (SVMs) to be used with XBRL. The experimental results show that the proposed model outperforms models based on only one type of information, either financial or corporate governance. Compared with conventional statistical methods, the proposed SVM model forecasts financial crises more accurately.

Date: 2015
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DOI: 10.1080/1540496X.2014.998888

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