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Corporate failure : A literature review
[La défaillance des entreprises : Une revue de littérature]

Author

Listed:
  • Safaa Mrani

    (UH2MC - Université Hassan II [Casablanca])

  • Loulid Adil

    (UH2MC - Université Hassan II [Casablanca])

Abstract

This paper provides a comprehensive overview of the corporate failure phenomenon, shedding light on its intricate nature, which has been a subject of continuous exploration since the Great Depression of 1929. This article adopts a methodological approach centered on a meticulous review of the relevant body of work. The findings of this analysis reveal that corporate failure can be defined as a gradual and complex process, resulting from a combination of various factors and events, including economic, financial, legal, and sometimes organizational aspects. This ultimately leads to the company's inability to sustainably fulfill its financial and operational obligations. Typically, failure is anticipated once signs of bankruptcy have been observed. In this context, the article extensively explores the mechanisms of corporate failure as initially formulated by the early pioneers in this discipline. Moreover, it conducts a comprehensive critical assessment of different models for predicting corporate failure. Keywords: Corporate failure, prediction model, bankruptcy, financial ratios

Suggested Citation

  • Safaa Mrani & Loulid Adil, 2023. "Corporate failure : A literature review [La défaillance des entreprises : Une revue de littérature]," Post-Print hal-04219260, HAL.
    • Handle: RePEc:hal:journl:hal-04219260
    DOI: 10.5281/zenodo.8369814
    Note: View the original document on HAL open archive server: https://hal.science/hal-04219260
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    References listed on IDEAS

    as
    1. Korol, Tomasz, 2013. "Early warning models against bankruptcy risk for Central European and Latin American enterprises," Economic Modelling, Elsevier, vol. 31(C), pages 22-30.
    2. Salem Tacine & Carole Gresse, 2003. "Les entreprises en difficulté," Post-Print halshs-00367769, HAL.
    3. Varetto, Franco, 1998. "Genetic algorithms applications in the analysis of insolvency risk," Journal of Banking & Finance, Elsevier, vol. 22(10-11), pages 1421-1439, October.
    4. Ena Rose–Green & Mark Dawkins, 2002. "Strategic Bankruptcies and Price Reactions to Bankruptcy Filings," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(9‐10), pages 1319-1335.
    5. repec:dau:papers:123456789/635 is not listed on IDEAS
    6. Dambolena, Ismael G & Khoury, Sarkis J, 1980. "Ratio Stability and Corporate Failure," Journal of Finance, American Finance Association, vol. 35(4), pages 1017-1026, September.
    7. Ena Rose-Green & Mark Dawkins, 2002. "Strategic Bankruptcies and Price Reactions to Bankruptcy Filings," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(9&10), pages 1319-1335.
    Full references (including those not matched with items on IDEAS)

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