Application of Ants Colony System for Bankrupcy Prediction of Companies Listed in Theran Stock Exchange

One of the most recent researches in financial field is using an Ant Colony System (ACS) in the corporate bankruptcy prediction. In this paper, the Ant Colony System is used to predict the bankruptcy of listed companies in Tehran Stock Exchange. The research findings shows that model’s prediction power is about 59% with taking into account the rations proposed by Altman (1968). After examining the causes of significant errors in model, a proposed model is introduced. This model which is based on four financial ratios fits the economical infrastructure of Iran. The results obtained from testing of the suggested model indicate that this model is able to predict the corporate bankruptcy one year prior to bankruptcy with an accuracy of 93% for large-sized firms and about 90% for small-sized ones, respectively.