Leicester MBA Dissertation Research

Corporate Bankruptcy

Bankruptcy prediction is a long-interesting area of research for the last several decades. Starting from the financial crash during 1930 till the recent economic meltdown and financial crisis drew a great interest on Financial Distress literature. As finance professional I had great curiosity on the Financial facts and figures; my curiosity grown to an overwhelming stage due to recent corporate scandals like Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. Financial Reports of these corporations were duly certified by the professional accountants who does not carry any responsibility for their act and never made any mistake of not to indemnify or immunize themselves from the responsibility of these financial frauds through legal instruments. These types of massive frauds were certified as true and fair and the culprits were being deliberately indemnified through ambiguous legal instruments. 
 

 Sarbanes-Oxley Act of 2002 – Frequently Asked Questions


During 2002 US government has introduced Sarbanes–Oxley (SOX) Act to curtail the corporate corruption and regulate the corporations. As a result of SOX, top management must now individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the independence of the outside auditors who review the accuracy of corporate financial statements, and increased the oversight role of boards of directors. Introduction of SOX has reduced the utility of Audit reports which were being used as a unquestionable endorsement for the last several decades all over the world. At present the Audited Financial reports does not appeal much to the analysts who are using more advanced tools and techniques to read the pulse of the business. 

My MBA Dissertation

 My dissertation research objective is to identify whether the Financial Ratios are useful and essential tool of corporate decision making process or they are just a set of manipulative numbers which can be manipulated without changing indicative benchmarks. As earlier researchers find that the Financial Ratios as stand alone information can contribute very little towards the indication of Financial distress of an organization rather in case of combined usage along with some rigorous statistical methods can bring great result and it can contribute towards forecasting of bankruptcy and financial distress of a firm with reasonable accuracy. In my dissertation project I am going to proof that Financial ratios are a useful set of numbers which can help the external and internal Financial report users to read the real financial health of a firm where they are going to invest in. In my project I also constructed a Financial Model based on current financial data similar to the Z-Score model of Mr. Altman which he formulated during 1968, which sometimes does not provide accurate results in terms of predicting the financial distress of modern firms. My constructed Financial model is able to predict the bankrupted firms with an accuracy of about 88% for the ratios of one year prior to the bankruptcy. 


A Great Journey of Knowing the unknowing

My dissertation research endowed me with a treasure of knowledge and habit of perseverance till I overcome a problem. After discussing my project with my professor I was pretty confused about the complete journey of my dissertation research. Surprisingly my professor told me to create and invent a financial model using IBM SPSS statistical software which has a capability to predict bankruptcy. Initially I thought my teacher was joking and he would like to see my response on this. I was not sure about the viability of my project until I started rigorous literature review which given me a clear concept about how to go about the project. I figured out the statistical method Logistics Regression Analysis (LRA) to be the main analytical tool for this research project. LRA is one of an advanced analytical tool which is used by the career researchers in the field of Medial and Bio Science research projects. Understanding LRA in depth and applying this method in my research project enabled my capability of using this method in my professional career for conducting further Business research projects successfully.

The toughest part of my dissertation research was the methodology part which I had to ponder and research a large number of hours and I had to do persistent review of previous literature to chart the methodology route of my research project. Beside the methodology part the data analysis and interpretation was also a challenging part as the SPSS software outputs are statistical terms which require good understanding of statistics technical jargons. During this eight months intensive research I was continuously engaged in discussion with my supervisor through University blackboard who helped me with patience as sometimes I dropped several critical questions in a single day to him and he responded all of them painstakingly.

At some stage of my dissertation research I felt extreme hopeless when I find that I was proceeding towards an unsuccessful way towards my research project. I pulled back myself from this blind alley and came back to the correct track towards successful completion of the project.  

This project not only taught me how to conduct a business research but also instilled the seed of quest for gathering knowledge and lifelong learning habit which will help me to excel in every way of my professional life.