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http://dx.doi.org/10.14400/JDC.2017.15.2.121

A Study about Internal Control Deficient Company Forecasting and Characteristics - Based on listed and unlisted companies -  

Yoo, Kil-Hyun (Dept. of Business & Administration Graduate School of Dongguk University)
Kim, Dae-Lyong (Dept. of Business & Administration, Dongguk University)
Publication Information
Journal of Digital Convergence / v.15, no.2, 2017 , pp. 121-133 More about this Journal
Abstract
The propose of study is to examine the characteristics of companies with high possibility to form an internal control weakness using forecasting model. This study use the actual listed/unlisted companies' data from K_financial institution. The first conclusion is that discriminant model is more valid than logit model to predict internal control weak companies. A discriminant model for predicting the vulnerability of internal control has high classification accuracy and has low the Type II error that is incorrectly classifying vulnerable companies to normal companies. The second conclusion is that the characteristic of weak internal control companies have a low credit rating, low asset soundness assessment, high delinquency rates, lower operating cash flow, high debt ratios, and minus operating profit to the net sales ratio. As not only a case of listed companies but unlisted companies which did not occur in previous studies are extended in this study, research results including the forecasting model can be used as a predictive tool of financial institutions predicting companies with high potential internal control weakness to prevent asset losses.
Keywords
Internal Control Weakness companies; Vulnerability Prediction Model; Credit rating; Asset soundness assessment; Internal Control over Financial Reporting;
Citations & Related Records
Times Cited By KSCI : 6  (Citation Analysis)
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