Bayesian Networks for Firm Performance Evaluation

In a competitive environment a proper evaluation of the financial status and performance of a firm is an important issue. Different kind and source of information should be taken into account. Among the possible solutions, we propose to use Bayesian Networks as a quantitative management tool for firm performance evaluation. Via the use of the network we can combine accounting data with qualitative information related to industry environment, ownership, management and board composition. Bayesian Networks allow to describe the relationship between the examined variables in an immediate way, and permit to identify, in a mouse click time scenarios that could lead to financial distress.