Predicting Firm Failure: A Behavioral Finance Perspective

Rassoul Yazdipour and Richard Constand
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Rassoul Yazdipour: California State University, Fresno
Richard Constand: University of West Florida

Journal of Entrepreneurial Finance, 2010, vol. 14, issue 3, 90-104

Abstract: In this article we first argue that researchers in the area of financial distress and failure cannot ignore the human/managerial/decision-making side of the business and just focus on the business' operations side; as has been the case so far for almost all the research in the area. We then discuss how psychological phenomena and principles, known as heuristics or mental shortcuts, could be utilized in building more powerful success/failure prediction models especially for small and medium sized enterprises (SMEs).

Keywords: Bankruptcy; Firm Failure; Behavioral Finance; Behavioral Economics; Distress (search for similar items in EconPapers)
JEL-codes: G33 M13 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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