Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods
The problem of predicting profitability is exceptionally relevant for investors and company owners. This paper examines the factors affecting firm performance and tests and compares various methods based on linear and non-linear dependencies between variables for predicting firm performance. In this...
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| Format: | Article |
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MDPI AG
2023-04-01
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| Series: | Mathematics |
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| Online Access: | https://www.mdpi.com/2227-7390/11/8/1916 |
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| author | Darko B. Vukovic Lubov Spitsina Ekaterina Gribanova Vladislav Spitsin Ivan Lyzin |
| author_facet | Darko B. Vukovic Lubov Spitsina Ekaterina Gribanova Vladislav Spitsin Ivan Lyzin |
| author_sort | Darko B. Vukovic |
| collection | DOAJ |
| description | The problem of predicting profitability is exceptionally relevant for investors and company owners. This paper examines the factors affecting firm performance and tests and compares various methods based on linear and non-linear dependencies between variables for predicting firm performance. In this study, the methods include random effects regression, individual machine learning algorithms with optimizers (DNN, LSTM, and Random Forest), and advanced machine learning methods consisting of sets of algorithms (portfolios and ensembles). The training sample includes 551 retail-oriented companies and data for 2017–2019 (panel data, 1653 observations). The test sample contains data for these companies for 2020. This study combines two approaches (stages): an econometric analysis of the influence of factors on the company’s profitability and machine learning methods to predict the company’s profitability. To compare forecasting methods, we used parametric and non-parametric predictive measures and ANOVA. The paper shows that previous profitability has a strong positive impact on a firm’s performance. We also find a non-linear positive effect of sales growth and web traffic on firm profitability. These variables significantly improve the prediction accuracy. Regression is inferior in forecast accuracy to machine learning methods. Advanced methods (portfolios and ensembles) demonstrate better and more steady results compared with individual machine learning methods. |
| first_indexed | 2024-03-11T04:46:46Z |
| format | Article |
| id | doaj.art-6574c4c4ab934889a2a883872558fcec |
| institution | Directory Open Access Journal |
| issn | 2227-7390 |
| language | English |
| last_indexed | 2024-03-11T04:46:46Z |
| publishDate | 2023-04-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Mathematics |
| spelling | doaj.art-6574c4c4ab934889a2a883872558fcec2023-11-17T20:18:25ZengMDPI AGMathematics2227-73902023-04-01118191610.3390/math11081916Predicting the Performance of Retail Market Firms: Regression and Machine Learning MethodsDarko B. Vukovic0Lubov Spitsina1Ekaterina Gribanova2Vladislav Spitsin3Ivan Lyzin4Graduate School of Management, Saint Petersburg State University, Volkhovskiy Pereulok 3, 199004 Saint Petersburg, RussiaDivision for Social Sciences and Humanities, School of Engineering Education, National Research Tomsk Polytechnic University, Lenina Avenue, 30, 634050 Tomsk, RussiaDivision for Social Sciences and Humanities, School of Engineering Education, National Research Tomsk Polytechnic University, Lenina Avenue, 30, 634050 Tomsk, RussiaSchool of Engineering Entrepreneurship, National Research Tomsk Polytechnic University, Lenina Avenue, 30, 634050 Tomsk, RussiaSchool of Information Technology and Robotics Engineering, National Research Tomsk Polytechnical University, Lenina Avenue, 30, 634050 Tomsk, RussiaThe problem of predicting profitability is exceptionally relevant for investors and company owners. This paper examines the factors affecting firm performance and tests and compares various methods based on linear and non-linear dependencies between variables for predicting firm performance. In this study, the methods include random effects regression, individual machine learning algorithms with optimizers (DNN, LSTM, and Random Forest), and advanced machine learning methods consisting of sets of algorithms (portfolios and ensembles). The training sample includes 551 retail-oriented companies and data for 2017–2019 (panel data, 1653 observations). The test sample contains data for these companies for 2020. This study combines two approaches (stages): an econometric analysis of the influence of factors on the company’s profitability and machine learning methods to predict the company’s profitability. To compare forecasting methods, we used parametric and non-parametric predictive measures and ANOVA. The paper shows that previous profitability has a strong positive impact on a firm’s performance. We also find a non-linear positive effect of sales growth and web traffic on firm profitability. These variables significantly improve the prediction accuracy. Regression is inferior in forecast accuracy to machine learning methods. Advanced methods (portfolios and ensembles) demonstrate better and more steady results compared with individual machine learning methods.https://www.mdpi.com/2227-7390/11/8/1916firm performancenon-linear models of panel data forecastingretail market companiesprofitability predictionrandom effects regressionmachine learning methods |
| spellingShingle | Darko B. Vukovic Lubov Spitsina Ekaterina Gribanova Vladislav Spitsin Ivan Lyzin Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods Mathematics firm performance non-linear models of panel data forecasting retail market companies profitability prediction random effects regression machine learning methods |
| title | Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods |
| title_full | Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods |
| title_fullStr | Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods |
| title_full_unstemmed | Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods |
| title_short | Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods |
| title_sort | predicting the performance of retail market firms regression and machine learning methods |
| topic | firm performance non-linear models of panel data forecasting retail market companies profitability prediction random effects regression machine learning methods |
| url | https://www.mdpi.com/2227-7390/11/8/1916 |
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