Fen‐May Liou and Chien‐Hui Yang
The objective of this paper is to stress the importance of detecting financial frauds in predicting business failures disclosed by the unexpected financial crisis brought by…
Abstract
Purpose
The objective of this paper is to stress the importance of detecting financial frauds in predicting business failures disclosed by the unexpected financial crisis brought by Enron, Worldcom and other corporate distresses involving accounting irregularities.
Design/methodology/approach
The most frequently used methodologies in predicting business failures, discriminant analysis and neural network (NN) (based on the Kolmogorov‐Gabor polynomial Volterra series algorithm) are used. This paper suggests a two‐stage NN procedure: the first stage detected the false financial statements, which were excluded from samples that used to predict the business failures at the second stage. The one‐stage discriminant analysis and the NN model are used to contrast the two‐stage approach in terms of accuracy rate.
Findings
The one‐stage NN model has a higher accuracy rate in identifying failed firms than the discriminant analysis, while the two‐stage NN approach has an even higher accuracy rate than the one‐stage NN model.
Practical implications
Detecting the fraudulent reporting in advance can effectively improve the accuracy rate of business failure predictions.
Originality/value
The paper draws attention to the importance of excluding fraudulent financial reporting to increase the accuracy rate in predicting business failures.
Details
Keywords
Feng-sha Chou, Chih-Chien Wang, Ming-Cheng Lai, Chien-Hui Tung, Yann-Jy Yang and Kuen-Hung Tsai
The study discusses organic agricultural product persuasion using an empirical survey. This study argued that strong argument persuasive advertising message would trigger…
Abstract
Purpose
The study discusses organic agricultural product persuasion using an empirical survey. This study argued that strong argument persuasive advertising message would trigger individuals' self-reference to the harm of pesticide residue in non-organic agricultural product, which would raise their purchase intention of organic agricultural product.
Design/methodology/approach
The present study conducted an empirical investigation in Taiwan by recruiting 527 Taiwanese participants using the convenience sampling procedure. The current research performed structural equation modeling analysis and used LISREL software to report the analytical results.
Findings
Individuals with health consciousness may perceive a high-level risk of non-organic agricultural product, which would raise individuals' fear perception to the harm of pesticide residue. Fear perception will increase individual's purchase intention of organic agricultural product. Results can help industry practitioners benefit from the results by enabling them to develop their advertising strategy for organic food.
Originality/value
Results can help industry practitioners benefit from the results by enabling them to develop their advertising strategy for organic food.