– In total, 52 financial variables were identified from previous
studies as potentially significant. A number of Taiwanese firms experienced financial distress or were
accused of fraudulent reporting in 2005. Data on these firms and their contemporaries were obtained
from the Taiwan Economic Journal data bank and Taiwan Stock Exchange Corporation. Financial
variables were calculated for the years 2003 and 2004. Three well-known data mining algorithms were
applied to build detection/prediction models for this sample: logistic regression, neural networks, and
classification trees