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Improving the Quality of Financial Information Through Machine Learning

Author

Listed:
  • Georgi Hristov

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

This paper reviews previous research in order to emphasize the importance of financial information and its effects both on companies and stakeholders (owners, managers, investors, and creditors). It outlines the problems with one of the key financial reporting assumptions – the going concern assumption which is equalized to bankruptcy for the purposes of the analysis. The empirical analysis includes the creation of several machine learning models which classify companies as either “going concern†or “non-going concern†based on four financial indicators. The aim of the analysis is to provide insight on how machine learning approaches can improve financial information quality.

Suggested Citation

  • Georgi Hristov, 2024. "Improving the Quality of Financial Information Through Machine Learning," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 529-540, September.
    • Handle: RePEc:nwe:eajour:y:2024:i:3:p:529-540
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    File URL: https://www.unwe.bg/doi/eajournal/2024.3/EA.2024.3.04.pdf
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    More about this item

    Keywords

    financial reporting; financial information quality; going concern; bankruptcy; machine learning;
    All these keywords.

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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