Analysis Of Business Failure Research Articles

Risk associated with managed investment primary production projects

The paper presents a model of investment risk associated with projects that promote primary production, such as plantations, forests, aquaculture and agribusiness generally, commonly through managed investment schemes (MISs) set up as businesses. An analysis of business failures leads to a finite probability that the investor will lose money. The attractiveness of the investment is further diminished because of the uncertainty in the downstream return on investment and time of the return. Based on probabilistic arguments, the paper presents a robust model and method on which to make investment decisions. The approach is practical and will be useful to people interested in managed agribusiness investments. The approach is significant in that it quantifies what heretofore was largely undertaken qualitatively.

Determinants of business failure: The role of firm size

This study uses quarterly time series data for the period 1964:I–1991:III to determine the effects of several factors on the aggregate business failure rate in the United States. The theoretical basis used is a dynamic profit maximization model. The empirical specification is a double-log functional form. A new approach to the incorporation of firm size into the analysis of business failure is adopted. Viewing business failure as a consequence of negative profits, the estimates support the managerial utility maximization theory. Moreover the findings show that new business formation has a negative effect on the failure rate while the same variable lagged by twelve quarters captures the timing of failure with a positive coefficient.

Analysis of business failures in France

In the present economic situation, business failures are a matter of major concern to government and business alike. The current period of slow growth in France, and the rigidity of its productive system make it more important than ever to act to insure the survival of its industrial fabric. This necessity has found recognition in the fact that the French Parliament is now discussing a Government bill designed to head off business failures by means of a series of early-warning signals. Under this bill, the company auditors' obligation is widened to include the duty to report to the company any factor liable to compromise the continued operation of that firm. The context within which the Banque de France's ‘Centrale de Bilans’ 1 1 Central Balance Sheet Data Office, a voluntary organisation to which 25,000 French businesses belong submitting their balance sheets for analysis eac is currently pursuing its work favors the development of a discriminant function capable of detecting symptoms of business failure at the earliest possible opportunity. This work has been facilitated, and usefully guided, by Altman's pioneering research in this field since 1968, as well as by the work of Blum, Deakin, Edmister and Taffler, to rite just a few names from the Anglo-Saxon world. In France, the most recent research has been initiated by the CESA [Altman et al. (1974)] and pursued by Collongues, Sulzer, Conan and Holder, as well as by certain banks. But in this last case applications have remained strictly limited.