Predicting financial distress:A comparison of survival analysis and decision tree techniques

AbstractFinancial distress and then the consequent failure of a business is usually an extremely costly and disruptive event. Statistical financial distress prediction models attempt to predict whether a business will experience financial distress in the future. Discriminant analysis and logistic regression have been the most popular approaches, but there is also a large number of alternative cutting – edge data mining techniques that can be used. In this paper, a semi-parametric Cox survival analysis model and non-parametric CART decision trees have been applied to financial distress prediction and compared with each other as well as the most popular approaches. This analysis is done over a variety of cost ratios (Type I Error cost: Type II Error cost) and prediction intervals as these differ depending on the situation. The results show that decision trees and survival analysis models have good prediction accuracy that justifies their use and supports further investigation

New approach to nonrelativistic ideal magnetohydrodynamics

We provide a novel action principle for nonrelativistic ideal magnetohydrodynamics in the Eulerian scheme exploiting a Clebsch-type parametrisation. Both Lagrangian and Hamiltonian formulations have been considered. Within the Hamiltonian framework, two complementary approaches have been discussed using Dirac's constraint analysis. In one case the Hamiltonian is canonical involving only physical variables but the brackets have a noncanonical structure, while the other retains the canonical structure of brackets by enlarging the phase space. The special case of incompressible magnetohydrodynamics is also considered where, again, both the approaches are discussed in the Hamiltonian framework. The conservation of the stress tensor reveals interesting aspects of the theory.Comment: 20 pages, LaTeX, a new section on incompressible MHD included, published in Eur. Phys. J.

Conditional probability of actually detecting a financial fraud - a neutrosophic extension to Benford's law

This study actually draws from and builds on an earlier paper (Kumar and Bhattacharya, 2002). Here we have basically added a neutrosophic dimension to the problem of determining the conditional probability that a financial fraud has been actually committed, given that no Type I error occurred while rejecting the null hypothesis H0: The observed first-digit frequencies approximate a Benford distribution; and accepting the alternative hypothesis H1: The observed first-digit frequencies do not approximate a Benford distribution. We have also suggested a conceptual model to implement such a neutrosophic fraud detection system.Comment: 9 page