Corporate turnaround and financial distress

Malcolm Smith and Christopher Graves

Managerial Auditing Journal, 2005, vol. 20, issue 3, 304-320

Abstract: Purpose - Drawing on variables cited in the turnaround literature, this study aims to explore whether information contained within annual reports is useful in distinguishing between distressed companies that enact a turnaround and those that fail. Design/methodology/approach - This study develops a discriminant model to identify distressed companies that have turnaround potential. Findings - Analysis of the results reveals that successful turnarounds are associated with the severity of the distressed state, its determinants, with the extent of change in the distressed state since the previous year, and firm size. Originality/value - This article is of use in identifying what information is useful in annual reports.

Keywords: Turnarounds; Corporate strategy; Financial management (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:02686900510585627

DOI: 10.1108/02686900510585627

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