Explaining financial difficulties based on previous payment behavior, management background variables and financial ratios

Peter Back

European Accounting Review, 2005, vol. 14, issue 4, 839-868

Abstract: This paper shows evidence that it is possible to explain financial difficulties in small and medium sized firms based on non-financial variables. The results indicate that the estimated model based on non-financial variables classified firms even better than the financial ratio model, especially when classifying bankrupt firms and firms with payment delays. The best overall classification was achieved using the model combining financial ratios and non-financial variables. The non-financial variables measuring the number of payment delays were statistically the most important. The main implication of the results is that non-financial variables embrace important information in attempts to explain financial difficulties, and this should be of interest given that payment behavior variables (payment delays and payment disturbances) may occur more frequently than the publication of intermittent financial statements.

Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09638180500141339 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:euract:v:14:y:2005:i:4:p:839-868

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REAR20

DOI: 10.1080/09638180500141339

Access Statistics for this article

European Accounting Review is currently edited by Laurence van Lent

More articles in European Accounting Review from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().