Audit Analytics & companies in trouble

One of the databases that allows you to investigate companies that are in trouble is Audit Analytics (AA). One specific variable in the databases of AA allows you to select companies that are bankrupt or in liquidation, etc. The variable is called “Termination Status“. According to the Data dictionary this variable: “Indicates whether the registrant has formally de-registered with the SEC. We indicate the cause when possible, 2 = Went Private, 3 = Bankruptcy, 4 = Merger/Acquisition, 5 = Termination, 6 = Liquidation“. The variable can be found in the Auditor Opinion part database at search Step 3 in Wharton under the first box with company information/variables.

If you use the Wharton version of AA you can find companies (that are in trouble) only through using the option at Step 2 “Search entire database“. Unlike many databases the AA database can not be searched using a conditional statement at step 2 when choosing this search option. This means that you will have to download some basic company data on all companies for a certain time period and include the variable “Temination Status” in the download (NB: do not choose the Wharton download option Excel/XLS/XML if you think you may get more then 65,000 rows in the output as the download will be cut short at this point. You can choose tab-delimited text because these text files can be opened in Excel).

Afterwards, when you have opened the text file in Excel you can use the filer option to make visible only companies with the status 3 and 6 (and maybe 5, if necessary). See below an example screenshot.

After using the filter to get only bankrupt companies you can use the codes in the column COMPANY_FKEY to do another search in the same database and then look up information on these companies only. The COMPANY_FKEY is the same code as mentioned at Wharton search Step 2: Company Key (CIK). NB: If you have many codes (and many duplicates) you can copy this column to a new Excel sheet and (in Excel 2007) go to the tab Data (or Gegevens) and use the option in the Excel ribbon to remove duplicates. Then copy the codes and create a text file which can be uploaded at search Step 2 (in Wharton): Upload a file containing company codes.

Next at step 3 you indicate which variables are of interest when investigating companies in trouble. For example: it may be intresting to know if there was a Going Concern issue for these companies.

Email

%d bloggers like this: