Author, as appears in the article.: Lucanera JP; Fabregat-Aibar L; Scherger V; Vigier H

Department: Gestió d'Empreses

URV's Author/s: Fabregat Aibar, Laura

Keywords: Som Neural network Investment Insolvency Impact Firms Financial ratios Decisions Corporate failure Capital structure Business failure Behavior Bankruptcy prediction Bankruptcy

Abstract: © 2020 by the authors. The paper aims to identify which variables related to capital structure theory predict business failure in the Spanish construction sector during the subprime crisis. An artificial neural network (ANN) approach based on Self-Organizing Maps (SOM) is proposed, which allows one to cluster between default and active firms' groups. The similarities and differences between the main features in each group determine the variables that explain the capacities of failure of the analyzed firms. The network tests whether the factors that explain leverage, such as profitability, growth opportunities, size of the company, risk, asset structure, and age of the firm, can be suitable to predict business failure. The sample is formed by 152 construction firms (76 default and 76 active) in the Spanish market. The results show that the SOM correctly predicts 97.4% of firms in the construction sector and classifies the firms in five groups with clear similarities inside the clusters. The study proves the suitability of the SOM for predicting business bankruptcy situations using variables related to capital structure theory and financial crises.

Thematic Areas: Mathematics, applied Mathematical physics Matemática / probabilidade e estatística Logic Interdisciplinar Geometry and topology Ciencias sociales Astronomia / física Analysis Algebra and number theory

licence for use: https://creativecommons.org/licenses/by/3.0/es/

ISSN: 20751680

Author's mail: laura.fabregat@urv.cat

Author identifier: 0000-0002-0077-161X

Record's date: 2023-02-19

Papper version: info:eu-repo/semantics/publishedVersion

Link to the original source: https://www.mdpi.com/2075-1680/9/2/46

Licence document URL: http://repositori.urv.cat/ca/proteccio-de-dades/

Papper original source: Axioms: Mathematical Logic And Mathematical Physics. 9 (2):

APA: Lucanera JP; Fabregat-Aibar L; Scherger V; Vigier H (2020). Can the SOM analysis predict business failure using capital structure theory? Evidence from the subprime crisis in Spain. Axioms: Mathematical Logic And Mathematical Physics, 9(2), -. DOI: 10.3390/AXIOMS9020046

Article's DOI: 10.3390/AXIOMS9020046

Entity: Universitat Rovira i Virgili

Journal publication year: 2020

Publication Type: Journal Publications