Abstract
We investigate the relationship between bankruptcy risk and expected future sales growth for Norwegian non-listed rms for the period 1988-2007. We nd that rms with high bankruptcy risk also have high expected future growth. Financial ratios characterizing rms with high bankruptcy risk also characterize rms with high future expected growth. Small rms, rms with low levels of equity and retained earnings, rms with low protability and low levels of sales per unit of capital, have all higher expected future growth rates than other rms. These ndings suggest a tradeo between the upside potential of high growth and the downside risk of bankruptcy.
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