Dynamic analysis of different business failure process
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DOIhttp://dx.doi.org/10.21511/ppm.15(si).2017.02
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Article InfoVolume 15 2017, Issue #2 (cont. 3), pp. 486-499
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This work is framed in the research of business failure. We examine a method of analyzing the dynamics of financial failure. The authors examine a method of analyzing the dynamics of financial failure, because our goal is to analyze how the economic and financial indicators show the risk of failure in a group of companies.
Using a sample of 163 companies declared bankrupt or dissolved, the authors show how to depict company trajectories of behavior and movement to terminal failure. They analyze these trajectories to find and describe empirical evidence of the different dynamics of bankruptcy. The authors also show that the estimation of failure risk is more accurate when these different failure trajectories are defined.
In conclusion, the authors can see that there are different failure trajectories. One can use these different trajectories to identify more efficiently the indicators warning of the failure risk of the companies analyzed.
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JEL Classification (Paper profile tab)G32, G33
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References52
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Tables9
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Figures0
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- Table 1. Description of Laitinen (1991) research ratios
- Table 2. Frequencies by cluster
- Table 3. Summary contrast K-W by ratios described in Laitinen (1991)
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- Table 5. Contrast of independent sub-samples. Groups taken two by two
- Table 6. Summary contrast independent grouping (K-W)
- Table 7. Groups of companies that follow different failure processes
- Table 8. Proportional risk function for all companies of the sample (like these following the same failure process)
- Table 9. Proportional risks function for each processes failure detected in the sample
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