Age and size dependencies of firm failure processes: an analysis of bankrupted Estonian firms

2018 ◽  
Vol 60 (6) ◽  
pp. 1272-1285 ◽  
Author(s):  
Oliver Lukason
Keyword(s):  
Firm Size ◽  
Design Methodology ◽  
Multinomial Logistic Regression ◽  
Failure Process ◽  
Content Type ◽  
Financial Variables ◽  
Size Dependent ◽  
Age Dependent ◽  
Gradual Failure ◽  
Dependent Failure

Purpose This study aims to find out whether firm failure processes are age- and size-dependent. Design/methodology/approach The sample consists of 333 bankrupted Estonian firms. Failure processes are detected with consecutive factor and cluster analyses of six financial variables calculated for three pre-failure years. Multinomial logistic regression is applied to study the interconnections between failure processes (dependent variable) and firm size and age (independent variables). In addition, the contingency between detected failure processes and failure causes obtained from court judgements are studied. Findings Three failure processes are detected, of which the predominant one accounting for 55 per cent of cases is a gradual failure process, indicating a step-by-step decline in the values of financial variables. The two minority processes are mixed, meaning that some financial variables are poor for many years before the bankruptcy and others decrease only shortly before bankruptcy declaration. With an increase in firm size, the gradual failure process becomes more common, but in turn, the presence of the gradual failure process is not age-dependent. Failure causes detected by trustees are not associated with failure processes. Originality/value This paper is the first one to specifically outline the age and size dependencies of firm failure processes. In addition, the interconnection of failure causes and firm failure processes detected with financial variables are rarely studied topics.

Failure processes of exporting firms: evidence from France

2017 ◽  
Vol 27 (3) ◽  
pp. 322-334 ◽  
Author(s):  
Oliver Lukason ◽  
Tiia Vissak
Keyword(s):  
Design Methodology ◽  
International Markets ◽  
Statistical Test ◽  
Export Share ◽  
Content Type ◽  
Exporting Firms ◽  
Financial Variables ◽  
Different Types ◽  
Gradual Failure ◽  
Total Turnover

Purpose This paper aims to detect failure processes of French exporting firms and study their contingency with export processes. Design/methodology/approach The sample consisted of 131 bankrupted exporting firms from Bureau van Dijk’s Amadeus database. Factor and cluster analyses of six financial variables from Laitinen’s (1991) model were used to detect failure processes. Export processes were detected with cluster analysis of export share in total turnover. Contingency between failure and export processes was studied with a statistical test. Findings Three different failure processes existed for exporting firms. Two of these processes, which accounted for 79 per cent of firms, were classified as gradual failure: a step-by-step worsening of financial performance before the bankruptcy was declared. One was a symbiotic process reflecting varying pre-bankruptcy behaviours of different financial variables. Two different types of exporters existed. Most firms (77 per cent) were occasional exporters, while 23 per cent were constantly and more strongly involved in international markets before their bankruptcy was declared. There was no contingency between failure and export processes. Originality/value This study is the first one to detect failure processes specifically for exporting firms based on financial variables. In line with previous literature about non-exporting firms, gradual failure processes were most characteristic to exporting firms. The study shows that different types of exporters were not characterized by any unique behaviour of financial variables before their bankruptcy was declared.

scholarly journals Construction of China’s financial conditions index in the post-crisis era

2019 ◽  
Vol 2 (2) ◽  
pp. 258-276
Author(s):  
Nan Li ◽  
Liu Yuanchun
Keyword(s):  
Financial Stability ◽  
Design Methodology ◽  
Predictive Power ◽  
Time Varying ◽  
Content Type ◽  
Vector Autoregressive ◽  
Financial Variables ◽  
Financial Conditions ◽  
Time Varying Parameter ◽  
Better Than

Purpose The purpose of this paper is to summarize different methods of constructing the financial conditions index (FCI) and analyze current studies on constructing FCI for China. Due to shifts of China’s financial mechanisms in the post-crisis era, conventional ways of FCI construction have their limitations. Design/methodology/approach The paper suggests improvements in two aspects, i.e. using time-varying weights and introducing non-financial variables. In the empirical study, the author first develops an FCI with fixed weights for comparison, constructs a post-crisis FCI based on time-varying parameter vector autoregressive model and finally examines the FCI with time-varying weights concerning its explanatory and predictive power for inflation. Findings Results suggest that the FCI with time-varying weights performs better than one with fixed weights and the former better reflects China’s financial conditions. Furthermore, introduction of credit availability improves the FCI. Originality/value FCI constructed in this paper goes ahead of inflation by about 11 months, and it has strong explanatory and predictive power for inflation. Constructing an appropriate FCI is important for improving the effectiveness and predictive power of the post-crisis monetary policy and foe achieving both economic and financial stability.

The impact of firm size on competitive intelligence activities

foresight ◽  
2020 ◽  
Vol 22 (5/6) ◽  
pp. 563-577
Author(s):  
Jonathan Calof
Keyword(s):  
Firm Size ◽  
Design Methodology ◽  
Competitive Intelligence ◽  
Full Time ◽  
Business Analytics ◽  
Large Firms ◽  
Process Variables ◽  
Content Type ◽  
Study Results ◽  
The Impact

Purpose Given the importance of competitive intelligence (CI) to the economic performance of firms, understanding whether CI practice is impacted by firm size or by their awareness of CI maybe important when creating programs designed to improve firms’ CI performance. This paper aims to address this by examining the extent to which the CI practices of small and medium-sized enterprises (SMEs) and large firms differed using a sample of firms with knowledge/awareness of CI. Design/methodology/approach A survey was developed that included 10 CI organization questions and 67 CI process questions. The survey was sent to a sample with awareness/knowledge of CI – strategic and CI professionals (SCIP) members and individuals who had attended SCIP events T-tests were then used to compare the SME’s and large firms’ responses to the 10 CI organization and 67 CI process questions. Findings For firms with CI awareness/knowledge, the study results suggest that size has very little relationship with CI practice. Of the 10 CI organization variables, only two were significantly different between the SME’s and the large firms. Large firms had more full-time CI staff and were more likely to have a formal intelligence unit compared to the SME’s. Of the 67 CI process variables, only four were significantly different between the SME’s and the large firms. Large firms made more use of company intranet for distributing CI findings use business analytics software and use commercial databases for information than SME’s while the SME’s used social media, in particular Facebook more than large firms, in their competitive intelligence activities. Originality/value This study uses a sample frame of firms with CI awareness/knowledge in examining differences between SME’s and large firms CI practices.

Choice of governance structure and earnings quality

2016 ◽  
Vol 29 (4) ◽  
pp. 372-390 ◽  
Author(s):  
Pamela Kent ◽  
Richard Anthony Kent ◽  
James Routledge ◽  
Jenny Stewart
Keyword(s):  
Cluster Analysis ◽  
Corporate Governance ◽  
Firm Size ◽  
Design Methodology ◽  
Best Practice ◽  
Earnings Quality ◽  
Governance Structure ◽  
Governance Mechanisms ◽  
Content Type

Purpose The purpose of this paper is to examine the effectiveness of voluntary governance mechanisms in Australia. Design/methodology/approach This study identifies similar choices of corporate governance by Australian firms and tests the effectiveness of the choices made based on the earnings quality of reported firms. Cluster analysis is conducted using governance best practice variables, firm size and an earnings quality variable. Findings This paper’s results support the voluntary governance approach for smaller firms, but suggest that mandatory governance requirements could be beneficial for larger firms. Evidence suggests that a benefit accrues for larger firms with the adoption of governance best practice. Cluster analysis indicates that larger firms tend to exhibit higher levels of adoption of governance best practice than smaller firms. Originality/value This paper adds to the literature by providing important information regarding the suitability of adoption of voluntary governance mechanisms in Australia.

Power distance and landlord-tenant practices across countries

2017 ◽  
Vol 10 (5) ◽  
pp. 628-640
Author(s):  
Hassan Gholipour Fereidouni ◽  
Reza Tajaddini
Keyword(s):  
Cultural Values ◽  
Design Methodology ◽  
Power Distance ◽  
Real Estate Market ◽  
Cultural Dimension ◽  
Content Type ◽  
Explanatory Variables ◽  
Financial Variables ◽  
Alternative Measures ◽  
Market Variables

Purpose This paper aims to investigate whether cultural dimension of power distance, which is the extent that inequality is expected and accepted in societies, can explain underlying differences in landlord-tenant practices (LTP) across countries. Design/methodology/approach The authors use a sample covering countries from different regions. They apply the ordered probit regressions to estimate the relationships between the explanatory variables and LTP. Findings The results show that hierarchical societies demonstrate more pro-landlord practices. This finding is robust to alternative measures of power distance and different sample sizes. In addition, the authors find that countries with larger rental sectors and larger numbers of landlords with mortgages demonstrate more pro-tenant practices. The results also show that differences in LTP across countries are not significantly influenced by legal origin. Originality/value To the best of the authors’ knowledge, very limited studies have investigated the determinants of LTP across countries. In addition, while cultural values such as power distance have been used to explain the economic, social and financial variables, less, if any, number of studies have used them to explain the variation of real estate market variables such as LTP.

Fuzzy Markov development for buried transportation bridges

2019 ◽  
Vol 11 (2) ◽  
pp. 338-353 ◽  
Author(s):  
Koorosh Gharehbaghi ◽  
Kerry McManus ◽  
Kathryn Robson ◽  
Chris Eves ◽  
Matt Myers
Keyword(s):  
Markov Model ◽  
Design Methodology ◽  
Structural Integrity ◽  
Transition Probability ◽  
Warning Signs ◽  
Buried Structures ◽  
Content Type ◽  
Early Warning Signs ◽  
Age Dependent ◽  
Inspection And Maintenance

Purpose The purpose of this paper is to review the Fuzzy Markov development for assessing the structural integrity of buried transportation bridges. In doing so, the appropriateness of Fuzzy Markov will be assessed, leading to the subsequent model. Design/methodology/approach This research will utilize the Fuzzy Markov techniques as the conceptual framework. Such methodology is further supported via the utilization and evaluation of 30 buried transportation bridges using the developed Fuzzy Markov model. Findings Subsequently, through a developed Fuzzy Markov model, this research found that as the basis of structural resilience, specific matrices for age-dependent transition probability can be compiled using conditional survival probabilities in the various structural states; as the basis of structural integrity, specific environmental and economic schemes can also be established based on inspection intervals, intervention systems and failure phases; exact inspection and maintenance intervals can be scheduled to further prolong an asset’s life; and clear and early warning signs can also be formulated for immediate intervention when the structural integrity of the asset are indeed compromised. Originality/value The gap within the literature currently surrounds the limitation of computational analysis for some buried structures such as bridges. Specifically, to streamline such evaluation and regimes, a Fuzzy Markov is developed and reviewed.

Corporate governance and failure risk: evidence from Estonian SME population

2019 ◽  
Vol 42 (6) ◽  
pp. 703-720 ◽  
Author(s):  
Virgo Süsi ◽  
Oliver Lukason
Keyword(s):  
Corporate Governance ◽  
Logistic Regression ◽  
Firm Size ◽  
Design Methodology ◽  
Population Level ◽  
Ownership Concentration ◽  
Managerial Ownership ◽  
Content Type ◽  
Failure Risk ◽  
Definition Of

Purpose The purpose of this study is to find out how corporate governance is interconnected with failure risk in case of small- and medium-sized enterprises (SMEs). Design/methodology/approach The study is based on Estonian whole population of SMEs, in total 67,058 observations, and data are obtained from Estonian Business Register. Failure risk (FR) is portrayed with a well-known Altman et al. (2017) model, while seven variables reflecting corporate governance (CG) based on previous studies have been selected. As the method, logistic regression (LR) is applied with FR in the binary form as a dependent variable and seven CG variables as independent. The effect of firm size and age is studied with two separate LR models. Findings The results indicate that with the growth in manager’s age and the presence of managerial ownership, failure risk reduces. In turn, the presence of larger boards and managers having directorships in other firms leads to higher failure risk. Gender heterogeneity in the board, board tenure length and ownership concentration by means of having a majority owner are not associated with failure risk. The obtained results vary with firm size and age. Originality/value Unlike this study, research published on this topic earlier has used a much narrower definition of failure, mostly focused on large and listed companies, been sample based and information about corporate governance variables has often been obtained through questionnaires. All these limitations are relaxed in this population level study.

Visual disclosure through integrated reporting

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Giuseppe Nicolò ◽  
Alessandra Ricciardelli ◽  
Nicola Raimo ◽  
Filippo Vitolla
Keyword(s):  
Regression Model ◽  
Stakeholder Theory ◽  
Firm Size ◽  
Design Methodology ◽  
Corporate Disclosure ◽  
Environmental Sensitivity ◽  
Integrated Reporting ◽  
Content Type ◽  
Firm Profitability ◽  
Size Firm

PurposeThis study, based on stakeholder theory, aims to analyse the factors that can affect the level of visual disclosure in the context of integrated reporting (IR), which represents the last frontier of corporate disclosure.Design/methodology/approachThis study develops an innovative measure to measure the level of visual disclosure of integrated reports that takes into account the use and degree of integration of images and graphs. Furthermore, to test the hypotheses, this study uses a regression model on a sample of 134 international companies that published an integrated report in 2018.FindingsThe results show that firm size, firm profitability and industry environmental sensitivity positively affect the level of visual disclosure of the integrated reports.Originality/valueTo our knowledge, this is the first study that examines visual disclosure in the IR context. It also extends the field of application of the stakeholder theory, still little used to explain visual disclosure strategies, and increases knowledge on the determinants of IR.

Failure processes of young manufacturing micro firms in Europe

2016 ◽  
Vol 54 (8) ◽  
pp. 1966-1985 ◽  
Author(s):  
Oliver Lukason ◽  
Erkki K. Laitinen ◽  
Arto Suvas
Keyword(s):  
Design Methodology ◽  
Small Firms ◽  
Age Groups ◽  
Financial Data ◽  
European Countries ◽  
Factor Scores ◽  
Firm Age ◽  
Content Type ◽  
Exporting Firms ◽  
Financial Variables

Purpose The purpose of this paper is to find out which different failure processes exist among the young manufacturing micro firms, and whether the representation of those processes differs first, in European countries, and second, among exporting and non-exporting firms. Design/methodology/approach The study is based on financial data of 1,216 manufacturing micro firms from European countries. Failure processes have been detected with a two stage-method: by extracting latent dimensions from financial variables with factor analysis, and then, by clustering the established factor scores. Findings With firms’ age, the number of different failure processes reduces from four to two. Strong evidence was found about the dominance of different failure processes in different countries for most firm age groups. Failure processes are not strongly associated with (non-)exporting. Originality/value This paper is the first one determining young manufacturing micro firms’ failure processes and comparing the representation of those processes in different firm subsets, either based on their country of origin or (non-)exporting behavior. Moreover, previous studies have not encompassed specific sectors, young or very small firms.

Post termination interaction in international joint ventures (IJV)

foresight ◽  
2019 ◽  
Vol 21 (2) ◽  
pp. 200-215 ◽  
Author(s):  
Nakul Parameswar ◽  
Sanjay Dhir
Keyword(s):  
Bargaining Power ◽  
Design Methodology ◽  
Dynamic Capabilities ◽  
Joint Venture ◽  
Multinomial Logistic Regression ◽  
International Joint Ventures ◽  
International Joint Venture ◽  
Content Type ◽  
International Joint ◽  
Practical Implications

Purpose This paper aims to explore dynamics of post termination interaction between international joint venture (IJV) partners and empirically examines IJV level and dyad level factors that influence the choice of post IJV termination interaction as supplier, complement or competitor. Design/methodology/approach In-depth literature review is undertaken to identify IJV and dyad level that could influence the choice of post termination interaction between terminated IJV partners. Hypotheses are empirically validated using multinomial logistic regression on data collected on terminated IJV headquartered in India. Findings The results denote that the choice of post-IJV termination interaction between IJV partners as supplier, complement or competitor is influenced by interdependence, bargaining power, foreign partner’s purpose of IJV, complementarity and type of IJV termination. Research limitations/implications This paper explores an under researched area in extant IJV literature that could be taken up for study by academicians. The paper upholds and strengthens the dynamic capabilities view of strategic management in IJV context. Practical implications This paper examines a practice adopted by businesses in emerging markets and determines important factors that influence the choice of interaction post IJV termination between partners. Practitioners will be encouraged to understand and plan post termination dynamics with their terminated IJV partner. Originality/value The paper undertakes examination of a practical business phenomena, i.e. interaction post termination between terminated IJV partners.

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