International Effect on Family SME Financial Distress Prediction

2022 ◽  
pp. 197-214
Author(s):  
Ines Lisboa ◽  
Magali Costa
Keyword(s):  
Financial Distress ◽  
Default Risk ◽  
Small And Medium Enterprises ◽  
Lower Probability ◽  
Probability Of Default ◽  
Export Ratio ◽  
Financial Distress Prediction ◽  
Proposed Model ◽  
Family Smes ◽  
Medium Enterprises

Understanding the reasons of default risk is crucial to avoid the firm's bankruptcy. The purpose of this work is to analyze the impact of internationalization on firm's probability of distress. For it, this chapter aims to propose a model to predict default specific to family SMEs (small and medium enterprises). An unbalanced panel of 10,832 firms over the period from 2012-2018 is analyzed. Ex-ante criteria to classify firms in default or compliant is used. International SMEs have lower probability of default than domestic firms, and compliant firms export more. Results show that export ratio is an important determinant of the probability of default. Moreover, the ratios of liquidity, profitability, size, leverage, efficiency, cash flow, and age are also relevant. Moreover, these ratios explain default risk of both groups international and domestic SMEs. The proposed model has an accuracy of 92.9%, which increases to 95.6% if only export SMEs are analyzed.

International Effect on Family SME Financial Distress Prediction

2021 ◽  
pp. 175-192
Author(s):  
Ines Lisboa ◽  
Magali Costa
Keyword(s):  
Financial Distress ◽  
Default Risk ◽  
Small And Medium Enterprises ◽  
Lower Probability ◽  
Probability Of Default ◽  
Export Ratio ◽  
Financial Distress Prediction ◽  
Proposed Model ◽  
Family Smes ◽  
Medium Enterprises

Understanding the reasons of default risk is crucial to avoid the firm's bankruptcy. The purpose of this work is to analyze the impact of internationalization on firm's probability of distress. For it, this chapter aims to propose a model to predict default specific to family SMEs (small and medium enterprises). An unbalanced panel of 10,832 firms over the period from 2012-2018 is analyzed. Ex-ante criteria to classify firms in default or compliant is used. International SMEs have lower probability of default than domestic firms, and compliant firms export more. Results show that export ratio is an important determinant of the probability of default. Moreover, the ratios of liquidity, profitability, size, leverage, efficiency, cash flow, and age are also relevant. Moreover, these ratios explain default risk of both groups international and domestic SMEs. The proposed model has an accuracy of 92.9%, which increases to 95.6% if only export SMEs are analyzed.

scholarly journals Analysis of Family SMEs Default Risk: the Portuguese Case

2021 ◽  
Vol 15 (4) ◽  
pp. 76-92
Author(s):  
Inês Margarida Cadima Lisboa ◽  
Magali Costa ◽  
Filipa Santos
Keyword(s):  
Panel Data ◽  
Default Risk ◽  
Small And Medium Enterprises ◽  
Z Score ◽  
Logit Regression ◽  
Ex Ante ◽  
Family Smes ◽  
Score Model ◽  
Medium Enterprises

This work aims to study the default risk of family SMEs (small and medium enterprises) in Portugal, more specifically in the Leiria region. For this purpose, a panel data of 2,658 firms over the period 2012-2017 is analyzed. Using an ex-ante classification of defaulting, results suggest that there are more compliant firms and the number of defaulting firms have decreased over the period analyzed. Then, using a logit regression technique and six variables to predict default obtained through the stepwise methodology, results show that defaulting firms compared to compliant firms are usually younger, with higher difficulties in generating return and in being efficient, and more indebted. The Z’-score model was used as a robustness test, and results suggest that this model is inaccurate to the present reality and this specific sample. Therefore, new coefficients were estimated to increase the model’s efficiency. The proposed and the modified Z’-score models have an accuracy of 88.74% and 85.49%, respectively.

scholarly journals Financial Distress Prediction for Small and Medium Enterprises Using Machine Learning Techniques

2021 ◽  
Vol 32 (1) ◽  
pp. 4-14
Author(s):  
Aidas Malakauskas ◽  
Aušrinė Lakštutienė
Keyword(s):  
Random Forest ◽  
Financial Distress ◽  
Prediction Accuracy ◽  
Small And Medium Enterprises ◽  
Age Factors ◽  
Machine Learning Techniques ◽  
Financial Distress Prediction ◽  
Distress Prediction ◽  
Medium Enterprise ◽  
Medium Enterprises

Financial distress prediction is a key challenge every financing provider faces when determining borrower creditworthiness. Inherent opaqueness of Small and Medium Enterprise business complicates credit decision making process, therefore increasing cost to finance and lowering probability of receiving funds. This paper used data on 12.000 SMEs to estimate binomial classifiers for financial distress prediction using Logistic Regression, Artificial Neural Networks and Random Forest techniques. Classical financial ratios were used to estimate initial single-period predictors, which were later enhanced with time, credit history and age factors to retrieve multi-period models. Contrary to other studies, financial distress is understood as a significant challenge to company’s ability to cover liabilities rather than probability to go bankrupt. Highest prediction accuracy was reached using Random Forest algorithm with additional factors. It was concluded that period-at-risk adjustment is necessary to ensure highest financial distress prediction accuracy.

Family Firms, Enterprise Development and Tacit Knowledge Transformation: Small and Medium Enterprises (SMEs) Innovation in Malaysia

2021 ◽  
pp. 097215092110476
Author(s):  
John Lee Kean Yew
Keyword(s):  
Tacit Knowledge ◽  
Small Businesses ◽  
Global Economy ◽  
Family Firms ◽  
Small And Medium Enterprises ◽  
Enterprise Development ◽  
Generational Change ◽  
Knowledge Transformation ◽  
Family Smes ◽  
Medium Enterprises

In light of the global economy, it is undeniable that small businesses such as family-owned small and medium enterprises (SMEs) affect economic performance globally. They offer a key basis of flexibility and innovation but also face some challenges along the way. Since family SMEs form a large portion in the Malaysian corporate sector, the economy of this country is highly dependent on family firms’ entrepreneurial capacity. During the past decade, although family SMEs innovation is analytically and empirically reviewed in terms of theory building, it still lacks a systematic adoption of thorough and theoretically-based frameworks to gain understanding on the evolution of knowledge transformation surrounding this topic. This study primarily focuses on the development of tacit knowledge through innovation during generational change with specific attention given to three family firms ranging from old, new and declining wealth enterprises. Besides, this article appraises the evolution of SMEs innovation when new generations attempt to transform the tacit knowledge in advancing the products innovation and quality branding in Malaysia.

scholarly journals Predicting Corporate Financial Sustainability Using Novel Business Analytics

2018 ◽  
Vol 11 (1) ◽  
pp. 64 ◽  
Author(s):  
Kyoung-jae Kim ◽  
Kichun Lee ◽  
Hyunchul Ahn
Keyword(s):  
Financial Distress ◽  
Prediction Accuracy ◽  
Prediction Models ◽  
Support Vector ◽  
Model Parameters ◽  
Financial Sustainability ◽  
Business Analytics ◽  
Financial Distress Prediction ◽  
Proposed Model ◽  
Distress Prediction

Measuring and managing the financial sustainability of the borrowers is crucial to financial institutions for their risk management. As a result, building an effective corporate financial distress prediction model has been an important research topic for a long time. Recently, researchers are exerting themselves to improve the accuracy of financial distress prediction models by applying various business analytics approaches including statistical and artificial intelligence methods. Among them, support vector machines (SVMs) are becoming popular. SVMs require only small training samples and have little possibility of overfitting if model parameters are properly tuned. Nonetheless, SVMs generally show high prediction accuracy since it can deal with complex nonlinear patterns. Despite of these advantages, SVMs are often criticized because their architectural factors are determined by heuristics, such as the parameters of a kernel function and the subsets of appropriate features and instances. In this study, we propose globally optimized SVMs, denoted by GOSVM, a novel hybrid SVM model designed to optimize feature selection, instance selection, and kernel parameters altogether. This study introduces genetic algorithm (GA) in order to simultaneously optimize multiple heterogeneous design factors of SVMs. Our study applies the proposed model to the real-world case for predicting financial distress. Experiments show that the proposed model significantly improves the prediction accuracy of conventional SVMs.

scholarly journals Defining the Integrated Performance Measurement Systems in Small and Medium Enterprises: An Advanced Model

2019 ◽  
Vol 14 (12) ◽  
pp. 203
Author(s):  
Pirozzi Maria Grazia ◽  
Agliata Francesco ◽  
Tuccillo Danilo ◽  
Pirozzi Francesco
Keyword(s):  
Performance Measurement ◽  
Measurement System ◽  
Small And Medium Enterprises ◽  
Performance Measurement System ◽  
Strategic Management Accounting ◽  
Proposed Model ◽  
Performance Measurement Systems ◽  
Medium Enterprises ◽  
Integrated Performance ◽  
Advanced Model

Purpose: The purpose of this paper is to propose an “Integrated Performance Measurement System” (PMS) addressing the measurement and management of the financial and non-financial performance and “Intellectual Capital” (IC) for the “Small and Medium Entreprises” (SMEs). The paper relies on the “Integrated New Model” (INM) by Pirozzi and Ferulano (2016) that deals with the same task applied to a specific sector. Thus, we propose the modification of the INM model to define a “Renewed and Advanced Model” called “INM*” as integrated PMS for SMEs. Design/methodology approach: We used a qualitative method with an inductive and deductive approach to obtain an advanced model INM*. Thus, the SMEs characteristics are translated in our advanced INM* model according to the INM* structure and the IC framework. Moreover, we integrated in our proposed model INM* the “Strategic Management Accounting” (SMA) and the “Systems of Innovation” (SI) perspectives. Findings: We proposed the advanced model INM* as integrated PMS. This is a model supporting entrepreneurial and innovative SME as well as a conceptual framework summarizing the interactions and the knowledge conversions that occur between the IC components within the innovation processes. Thus, the proposed model is a useful tool for SMEs organizations. Originality/value: The renewed and advanced model INM* is useful in the academic and practical communities. It exhibits the advantages related to the innovative usage of a unique measurement system devoted to accomplish all the measurement tasks activated by SMEs. In addition, two other models are proposed and, in turn, are available for further research.

scholarly journals THE ROLE OF ISLAMIC CAPITAL MARKET FOR MICRO, SMALL, AND MEDIUM ENTERPRISES (MSMES) THROUGH SYNERGY OF MUTUAL FUND AND VENTURE CAPITAL INSTITUTION

2017 ◽  
Vol 3 (1) ◽  
pp. 81-112
Author(s):  
Yulizar D. Sanrego
Keyword(s):  
Venture Capital ◽  
Capital Market ◽  
Mutual Fund ◽  
Small And Medium Enterprises ◽  
Proposed Model ◽  
Investment Manager ◽  
Corporate Venture ◽  
Medium Enterprises ◽  
Fund Investment

It is worldly known that one of the main obstacles which is often faced by the micro, small, and medium enterprises (MSMEs) practitioners is the ability to access sources of funding. At the time where the absorption of banking credit to MSMEs is still very limited, the role of sharia capital market is considered as an alternative to support this limitation. Expanding the role of sharia capital market finds it moment when Indonesia Finance Service Authority (FSA) issued regulations that provide space for the capital market to also active in real sector businesses. In accordance with the FSA Rules N0.37/2014, mutual fund (unit trust) in the form of Collective Investment Contract (CIC) - Limited Investment/ Participation Fund (LPF) has the objective to pave the way for mutual fund investors to make direct investments in real investments. The proposed model that might be realized to smoothen the intermediary role of sharia capital market to the development of MSMEs is through the hybrid model that might linking mutual fund/investment manager and corporate, particularly venture capital. Using Analytical Network Process (ANP) approach this paper indicates that with the value of rater agreement 1.0, the research found that there are four main cluster problems which become an obstacle the proposed model, namely: (a) the reputation of mutual fund/investment manager; (b) investment grade rating of corporate (venture capital); (c) risk appetiate of investor as shahib al-mal; and (d) government regulation. Policy recommendation that might become solution, according to the value of rater agreement 1.0  is sequentially as follow, namely: (a) fully support from government; especially for a relatively new mutual fund with no experience in the capital markets industry; (b) Corporate (venture capital) should be able to offer Islamic Microfinance Finance Institutions (IMFIs) and MSMEs that have good business feasibility to the mutual fund/investment manager as well as investor; (c) the government should be able to guarantee legal certainty in the context of protection, including advocacy for investors; and last but not least (d) There is an extremely hope that investors could change their investment behavior paradigm, from risk averse to risk taker.Keywords: Sharia capital market, Mutual fund, Venture capital, MSMEJEL Classification: G1, G23, G24

scholarly journals Cost accounting in family SMES as a factor to guarantee their stability and permanence / La contabilidad de costos en las PYMES familiares como factor para garantizar su estabilidad y permanencia

2021 ◽  
Vol 3 (5) ◽  
pp. 3769-3782
Author(s):  
Zulema Cordova Ruiz ◽  
Sofía Lizzett Reyes Ayala (in memoria) ◽  
Jessica Lizbeth Cisneros Martínez ◽  
Sergio Bernardino López ◽  
Jesús Pedro Miranda Torres
Keyword(s):  
Small And Medium Enterprises ◽  
Cost Accounting ◽  
Management Control ◽  
Cost System ◽  
Family Smes ◽  
Management Techniques ◽  
Expected Benefits ◽  
Business Line ◽  
Medium Enterprises ◽  
The City

This work aims to analyze the barriers that are perceived as obstacles for family SMEs (Small and Medium Enterprises) to implement and consider cost accounting; detecting the benefits obtained in the adoption of a cost system and the existing relationship between performance and degree of use of cost management control techniques, with their permanence and generation of profits. The study was carried out with 90 family SMEs from the business line of the city of Mexicali, Mexico. The results show that the most important barriers to implementing cost accounting and management techniques are: The perception that they increase the work of accounting staff and the lack of cost specialists within the company. Among the expected benefits, when introducing new management systems, is to achieve accuracy in the information on the profitability of the product and obtain a reduction in costs in the company.

scholarly journals Corporate social responsibility in family SMEs: A comparative study

2016 ◽  
Vol 6 (1) ◽  
Author(s):  
Pedro Juan Martín Castejón ◽  
Beatriz Aroca López
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Comparative Study ◽  
Small And Medium Enterprises ◽  
Socially Responsible ◽  
Academic World ◽  
Family Smes ◽  
Medium Enterprises ◽  
Corporate Social

In recent years, corporate social responsibility (CSR) has attracted much interest in both the academic world and the professional, proof of this are many studies on this topic that have been made. However, most studies of CSR focus on larger organizations, with few studies focusing on small and medium enterprises (SMEs), and even less on family SMEs. For this reason, the objective of this research is to determine whether there are differences in orientation towards CSR between family SMEs and non-familiar ones, and if this fact can be influenced by gender and the level of formal studies of the manager, among other factors. The results, on a sample of 123 SMEs, indicate that family SMEs are more socially responsible than no familiar ones.

scholarly journals Design of a Model for Risk Reduction in Project Management in Small and Medium-Sized Enterprises

Symmetry ◽  
2021 ◽  
Vol 13 (5) ◽  
pp. 763
Author(s):  
Anna Nagyová ◽  
Hana Pačaiová ◽  
Štefan Markulik ◽  
Renáta Turisová ◽  
Róbert Kozel ◽  
...  
Keyword(s):  
Project Management ◽  
Small And Medium Enterprises ◽  
Optimal Method ◽  
Systematic Analysis ◽  
Management Standard ◽  
Proposed Model ◽  
Mathematical Evaluation ◽  
Medium Enterprises ◽  
Tools And Techniques ◽  
Selection Of

In general, it can be said that a project is a means of change so that the organization or individual obtain something they do not currently have, and which, in some respects, can ensure its functioning within the system in society, in the market, etc. Organizations often use different tools and techniques in project implementation to help manage projects. The selection of the optimal method requires a thorough systematic analysis. The chosen method must cover the requirements of project management with regard to its size and nature. One such tool is the ISO 21500 Guidance on project management standard, which defines the basic processes and documents needed for project management. The aim of this article is to propose a model through which it would be possible to effectively manage projects in small and medium enterprises (SMEs), i.e., where generally available international methodologies for project management are not introduced. The proposed model (referred to as Model B) was verified on projects in different SMEs in Slovakia. Mathematical evaluation presented in the paper as well as the knowledge and experience from this verification were summarized and the proposed Model B was modified (referred to as SMEPM: small and medium enterprises project management) so that it can be used in the implementation of other projects in the conditions of SMEs.

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