Factors Affecting Bankruptcy Depending on the Size of the Company

Martina Sponerová (), Miroslav Svoboda and Miroslav Sponer
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Martina Sponerová: Masaryk University
Miroslav Svoboda: Masaryk University
Miroslav Sponer: Czech Technical University in Prague

A chapter in Sustainable Finance in the Green Economy, 2022, pp 225-236 from Springer

Abstract: Abstract The aim of this article is to find out if there exist different factors that could predict bankruptcy depending on the size of the company and compare the differences. Our motivation is to show the most critical factors which have to be taken into attention when predicting bankruptcy. This chapter focuses on the Czech economy, specifically at small- and medium-sized enterprises (SMEs). It is the ongoing research about the value of several popular bankruptcy models that are often applied, namely, the Altman Z-score, the Ohlson O-score, the Zmijewski model, the Taffler model and the IN05 model. It uses significant predictors of these models. We have investigated around 2800 companies from the segment small- and medium-sized enterprises (SMEs), of which 638 failed during the period 2010–2017. We have investigated financial data for the years from 2010 to 2017. Results of the analysis confirm research hypotheses that there exist different factors which could predict bankruptcy depending on the size of the company and exploit commonly used financial indicators to assess the probability of bankruptcy precisely. We have found that for the segment of micro-enterprises, it is necessary to pay attention to liquidity and profitability. Small enterprises emphasise leverage, liquidity and profitability, while the model developed for the segment of medium-sized enterprises measures most of all leverage, liquidity and activity.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-81663-6_17

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DOI: 10.1007/978-3-030-81663-6_17

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