EAN: 9783954893041

PREDICTION OF HIGHLY LUCRATIVE COMPANIES USING ...

The intention of this study is to predict one year in advance whether a regarded firm will grow
extraordinarily in the next year. This is crucial for private investors and fund managers who
need to decide whether they should invest in a certain firm. Companies like Apple and Amazon
have shown that people who recognized the potential of such companies at the right time earned
a lot of money. The applied prediction models can also be used by politicians to identify
companies which are eligible for funding  because growing companies oftentimes hire many
employees. Since annual reports are often publically available for free  it is reasonable to
take advantage of them for such a prediction. The prediction models are based on classification
trees and forests because they have some very substantial advantages over other methods like
neural networks  which are frequently used in literature. For instance  they do not have
distributional assumptions  accept both quantitative and qualitative inputs  and are not
sensitive with respect to outliers. Furthermore  they are easy to understand by humans and can
deal with missing values  which is crucial for practical applications.

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