Abstract
In this study, a new Artificial Intelligence technique for non-linear mapping called Abductive Networks is used for two-group classification of firms. The results are compared with Neural Networks, another AI technique, which has been shown to perform better than the traditional statistical techniques such as multivariate discriminant analysis and logit. In empirical tests, Abductive Networks perform as well or better than Neural Networks on various criteria of measurement such as Type 1 / Type II accuracy criteria and Distance Between Centroids.