Featured Research

from universities, journals, and other organizations

Natural Selection: Mathematical Model Predicts Success Of Businesses

Date:
March 16, 2008
Source:
Inderscience Publishers
Summary:
Many gamblers claim to have a "system," whether they're shooting craps, backing horses or punting on the stock market. Now, researchers in Taiwan have devised an approach to spotting when a company is likely to fail based on the principles of natural selection.

Many gamblers claim to have a "system", whether they're shooting craps, backing horses, or punting on the stock market. Now, researchers in Taiwan have devised an approach to spotting when a company is likely to fail based on the principles of natural selection.

Ping-Chen Lin of the National Kaohsiung University of Applied Sciences in Kaohsiung and Jiah-Shing Chen of the National Central University, Jhongli, in Taiwan, explain how the financial status of any company can be of interest not only to its owners and employees but to a range of creditors, stockholders, banks, and individual investors. However, there are so many changing and interconnected factors that can lead to success or failure that it is usually considered an impossible task to predict whether a company will fail.

The researchers have now borrowed some of the principles of evolutionary biology to come up with a computer algorithm to make such predictions possible. They feed different variables, such as earnings per share, liabilities and net income, into their genetic-based hybrid algorithm, which assigns a weighting to each value.

The output of the algorithm is a new set of variables that are then selected for how well they fit the next set of financial results from the company. Those that fail are discarded, or reduced in weight, and those that match the actual results more closely are fed back into the algorithm for the next round.

By using actual data from successful and failed companies and feeding this into the algorithm the researchers build up the fittest set of variables and weightings. This allows the algorithm to evolve so that it can then predict the financial future of any given company based on current income and expenditure, and tax obligations.

The team has blind tested the predictive power of their system on several companies successfully. "Our experimental results show that this hybrid approach obtains better prediction performance than when using a single approach effectively," the researchers say.

They report details of their system in a forthcoming issue of the International Journal of Electronic Finance.


Story Source:

The above story is based on materials provided by Inderscience Publishers. Note: Materials may be edited for content and length.


Cite This Page:

Inderscience Publishers. "Natural Selection: Mathematical Model Predicts Success Of Businesses." ScienceDaily. ScienceDaily, 16 March 2008. <www.sciencedaily.com/releases/2008/03/080314102734.htm>.
Inderscience Publishers. (2008, March 16). Natural Selection: Mathematical Model Predicts Success Of Businesses. ScienceDaily. Retrieved April 17, 2014 from www.sciencedaily.com/releases/2008/03/080314102734.htm
Inderscience Publishers. "Natural Selection: Mathematical Model Predicts Success Of Businesses." ScienceDaily. www.sciencedaily.com/releases/2008/03/080314102734.htm (accessed April 17, 2014).

Share This



More Computers & Math News

Thursday, April 17, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

German Researchers Crack Samsung's Fingerprint Scanner

German Researchers Crack Samsung's Fingerprint Scanner

Newsy (Apr. 16, 2014) German researchers have used a fake fingerprint made from glue to bypass the fingerprint security system on Samsung's new Galaxy S5 smartphone. Video provided by Newsy
Powered by NewsLook.com
Twitter, Apple Social Data Purchases Likely to Spur More Mergers and Acquisitions

Twitter, Apple Social Data Purchases Likely to Spur More Mergers and Acquisitions

TheStreet (Apr. 16, 2014) The social media data space is likely to see more mergers and acquisitions following Twitter Inc.'s acquisition of tweet analyzer Gnip Inc. on Tuesday and Apples Inc.'s purchase of Topsy Labs Inc. back in December. One firm in particular, the U.K.'s DataSift Inc., could be on the list of potential buyers. Among other social media startups that could be ripe for picking is Banjo, whose mobile app provides aggregated content by topic and location. Banjo could also be a good fit for Twitter. Video provided by TheStreet
Powered by NewsLook.com
Bitcoin Exchange Mt. Gox to Liquidate After Rebuilding Rejected

Bitcoin Exchange Mt. Gox to Liquidate After Rebuilding Rejected

TheStreet (Apr. 16, 2014) Bitcoin exchange Mt. Gox has agreed to liquidate after a Japanese court rejected its plans to rebuild, according to a report by the Wall Street Journal. Mt. Gox filed for bankruptcy protection in February after announcing about 850,000 bitcoins, worth around $454 million at today's rates, may have been stolen by hackers. It has since recovered 200,000 of the missing bitcoins. The court put Mt. Gox's assets under a provisional administrator's control until bankruptcy proceedings begin. Video provided by TheStreet
Powered by NewsLook.com
BlackBerry: The Crash That Launched 1,000 Startups

BlackBerry: The Crash That Launched 1,000 Startups

Reuters - Business Video Online (Apr. 16, 2014) Tech startups in BlackBerry's hometown of Waterloo, Ontario, are tapping talent from the struggling smartphone company and filling the void left in the region by its meltdown. Reuters correspondent Euan Rocha visits the region that could become Canada's Silicon Valley. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins