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Failure patterns amongst small firms and their financial symptoms : A test of hypotheses
Crutzen, Nathalie; Van Caillie, Didier
2010In Proceedings of the 33rd Annual Congress of the European Accounting Asssociation
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Keywords :
Business failure patterns; Financial Symptoms; Small Firms
Abstract :
[en] Financial indicators have been widely used in the business failure literature in order to predict the risk of failure of firms (Beaver, 1966; Altman, 1968; Barnes, 1987; Aziz et al., 1988). In contrast, financial ratios have been less commonly used in a more preventive perspective to failure (Van Wymeersch and Wolfs, 1996; Van Caillie, 2000; Balcaen and Ooghe, 2006). Nevertheless, in a preventive perspective to small business failure, it is important to better understand how financial symptoms combine over time (Ooghe and Van Wymeersch, 1986) and to identify if relationships can be traced between the fundamental causes of failure and specific financial indicators. Considering this last statement and with reference to the explanatory business failure patterns (EBFPs) identified by Crutzen (2009) amongst a sample of small firms, this paper tests a series of hypotheses which aim at determining if these (causal) patterns can be associated with some specific financial indicators and, if so, if small distressed firms can be associated to one particular EBFP on the basis of the financial information published in the annual accounts. If each EBFP leads to some specific financial symptoms, then it will be possible to get a proxy information about the fundamental problems inducing failure without having any access to internal information, this identification being considered as a crucial step in the elaboration of any recovery or takeover plan (Argenti, 1976; Gaskill et al., 1993).
Disciplines :
Accounting & auditing
Author, co-author :
Crutzen, Nathalie  ;  Université de Liège - ULiège > HEC-Ecole de gestion : UER > Diagnostic et contrôle de l'entreprise
Van Caillie, Didier  ;  Université de Liège - ULiège > HEC-Ecole de gestion : UER > Diagnostic et contrôle de l'entreprise - Centre d'Etude de la Performance des Entreprises (C.E.P.E.)
Language :
English
Title :
Failure patterns amongst small firms and their financial symptoms : A test of hypotheses
Publication date :
May 2010
Event name :
33rd Annual Congress of the European Accounting Association
Event organizer :
European Accounting Association
Event place :
Istanbul, Turkey
Event date :
Du 19 au 21 mai 2010
Audience :
International
Main work title :
Proceedings of the 33rd Annual Congress of the European Accounting Asssociation
Peer reviewed :
Peer reviewed
Available on ORBi :
since 27 May 2010

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