FRINK Linked Data Fragments server

Matches in SemOpenAlex for { <https://semopenalex.org/work/W2079078730> ?p ?o ?g. }

• W2079078730 endingPage "340" @default.
• W2079078730 startingPage "323" @default.
• W2079078730 abstract "The rate of mortality among newly founded firms is very high. Failure statistics universally show that over 50% of newly founded firms will fail during their first five years. The economic, financial, and social losses resulting from these failures are significant. Thus, it is valuable to try to develop methods to predict and to avoid such failures. However, there are only very few studies dealing with failure prediction methods for newly founded firms. The aim of this study was to develop such methods that would also have practical value. Failure was defined as cash insolvency. The aim was to develop a failure prediction model based on financial statement data from newly founded firms. The ratios based on these data are hard measures and easy to calculate also for a person forced to only use publicly available information. A prediction model based on these ratios could, then, be a practical method for financial analysts and other interest groups in evaluating the failure probability of a new firm. This model does not require information about management, products, or markets because it rather deals with the symptoms of failure than the causes. The study is based on a supposition that failure process in a newly founded firm is characterized by a too high initial indebtedness and by too low revenue financing as compared with the budget. This supposition was supported by the empirical results based on the comparison of the financial ratios in first four years between 20 failed and 20 nonfailed small, newly founded, entrepreneurial, industrial firms. These results may give an explanation as to why some newly founded firms will fail and some will survive. This explanation is, of course, based on the development of financial variables in the very first years. The results showed that it is possible, to some degree, to predict the failure of a newly founded firm already in the first year after foundation. The prediction accuracy will increase, when the data of failure is approached. The best univariate predictors proved to be stockholders capital to total capital ratio (indebtedness), cash flow to net sales ratio (revenue financing), and cash flow to total debt ratio (sufficiency of revenue financing to pay financial obligations). The prediction accuracy can be increased by adjusting the critical value of the ratio stepwisely to the year of operation. Thus, the optimal critical value will change year by year after foundation. The prediction accuracy can slightly be improved by a multivariate analysis. This kind of multivariate model also included the logarithmic size (net sales) of the firm as a variable so that the probability to fail increased when the size increased. The results also showed that the same multivariate model estimated for older small firms, can be used as a failure prediction model for newly founded firms. However, this requires that quite different critical values are selected for both types of firms. To summarize, the results show that the failure of a newly founded firm is, to some degree, predictable by univariate or multivariate analyses. The failure risk is increased with high indebtedness, insufficient revenue financing, and large size in the first years. Hence, the risk to fail can be reduced by using less debt as initial financing and by paying special attention to the generation of a sufficient amount of revenues in initial stages. Furthermore, it may be less risky to start business operations with a smaller, rather than larger initial size." @default.
• W2079078730 created "2016-06-24" @default.
• W2079078730 creator A5010356911 @default.
• W2079078730 date "1992-07-01" @default.
• W2079078730 modified "2023-10-17" @default.
• W2079078730 title "Prediction of failure of a newly founded firm" @default.
• W2079078730 cites W1992522369 @default.
• W2079078730 cites W2020848494 @default.
• W2079078730 cites W2029981389 @default.
• W2079078730 cites W2030010789 @default.
• W2079078730 cites W2039035049 @default.
• W2079078730 cites W2066523057 @default.
• W2079078730 cites W2091100267 @default.
• W2079078730 cites W2771384601 @default.
• W2079078730 cites W4230474071 @default.
• W2079078730 cites W4233081203 @default.
• W2079078730 doi "https://doi.org/10.1016/0883-9026(92)90005-c" @default.
• W2079078730 hasPublicationYear "1992" @default.
• W2079078730 type Work @default.
• W2079078730 sameAs 2079078730 @default.
• W2079078730 citedByCount "127" @default.
• W2079078730 countsByYear W20790787302012 @default.
• W2079078730 countsByYear W20790787302013 @default.
• W2079078730 countsByYear W20790787302014 @default.
• W2079078730 countsByYear W20790787302015 @default.
• W2079078730 countsByYear W20790787302016 @default.
• W2079078730 countsByYear W20790787302017 @default.
• W2079078730 countsByYear W20790787302018 @default.
• W2079078730 countsByYear W20790787302019 @default.
• W2079078730 countsByYear W20790787302020 @default.
• W2079078730 countsByYear W20790787302021 @default.
• W2079078730 countsByYear W20790787302022 @default.
• W2079078730 countsByYear W20790787302023 @default.
• W2079078730 crossrefType "journal-article" @default.
• W2079078730 hasAuthorship W2079078730A5010356911 @default.
• W2079078730 hasConcept C10138342 @default.
• W2079078730 hasConcept C105795698 @default.
• W2079078730 hasConcept C121955636 @default.
• W2079078730 hasConcept C144133560 @default.
• W2079078730 hasConcept C162118730 @default.
• W2079078730 hasConcept C162324750 @default.
• W2079078730 hasConcept C163428354 @default.
• W2079078730 hasConcept C195487862 @default.
• W2079078730 hasConcept C199521495 @default.
• W2079078730 hasConcept C2776291640 @default.
• W2079078730 hasConcept C2781027943 @default.
• W2079078730 hasConcept C2781317483 @default.
• W2079078730 hasConcept C33923547 @default.
• W2079078730 hasConcept C4163816 @default.
• W2079078730 hasConcept C98014903 @default.
• W2079078730 hasConceptScore W2079078730C10138342 @default.
• W2079078730 hasConceptScore W2079078730C105795698 @default.
• W2079078730 hasConceptScore W2079078730C121955636 @default.
• W2079078730 hasConceptScore W2079078730C144133560 @default.
• W2079078730 hasConceptScore W2079078730C162118730 @default.
• W2079078730 hasConceptScore W2079078730C162324750 @default.
• W2079078730 hasConceptScore W2079078730C163428354 @default.
• W2079078730 hasConceptScore W2079078730C195487862 @default.
• W2079078730 hasConceptScore W2079078730C199521495 @default.
• W2079078730 hasConceptScore W2079078730C2776291640 @default.
• W2079078730 hasConceptScore W2079078730C2781027943 @default.
• W2079078730 hasConceptScore W2079078730C2781317483 @default.
• W2079078730 hasConceptScore W2079078730C33923547 @default.
• W2079078730 hasConceptScore W2079078730C4163816 @default.
• W2079078730 hasConceptScore W2079078730C98014903 @default.
• W2079078730 hasIssue "4" @default.
• W2079078730 hasLocation W20790787301 @default.
• W2079078730 hasOpenAccess W2079078730 @default.
• W2079078730 hasPrimaryLocation W20790787301 @default.
• W2079078730 hasRelatedWork W1898250579 @default.
• W2079078730 hasRelatedWork W1982777171 @default.
• W2079078730 hasRelatedWork W2183613150 @default.
• W2079078730 hasRelatedWork W2214752351 @default.
• W2079078730 hasRelatedWork W2389906344 @default.
• W2079078730 hasRelatedWork W2918940381 @default.
• W2079078730 hasRelatedWork W3010841744 @default.
• W2079078730 hasRelatedWork W3158248765 @default.
• W2079078730 hasRelatedWork W3184089065 @default.
• W2079078730 hasRelatedWork W4386442572 @default.
• W2079078730 hasVolume "7" @default.
• W2079078730 isParatext "false" @default.
• W2079078730 isRetracted "false" @default.
• W2079078730 magId "2079078730" @default.
• W2079078730 workType "article" @default.