PREDICTION OF COMPANY ACQUISITION IN GREECE BY MEANS OF THE ROUGH SETAPPROACH

This paper presents a new approach to forecast the acquisition of a fi rm in Greece based on the rough set theory, A sample of acquired firms and a sample of equivalent non-acquired firms are considered and the objective is to create patterns which would be able to distinguish bet ween the two classes of firms, based upon differences in their financi al characteristics (financial ratios), For this purpose, the rough set approach is used, The information about the firms is organized in a f inancial information table. In this table, financial characteristics o f the firms correspond to condition attributes and the classification is defined by a decision attribute telling if a firm has been acquired or not, The rough set approach enables one to discover minimal subset s of condition attributes (financial ratios) ensuring an acceptable ap proximation of the classification of the firms analyzed and to derive decision rules from the financial information table which can be used to best distinguish in the future between acquired and non-acquired fi rms, A comparison of the rough set approach with the discriminant anal ysis on the same set of data shows an advantage of the new approach. ( C) 1997 Elsevier Science B.V.