Success factors in small firm reorganisation
by Erkki K. Laitinen
International Journal of Management and Enterprise Development (IJMED), Vol. 6, No. 3, 2009

Abstract: This study develops a multivariate model to predict survival of a firm reorganising according to the Finnish Company Reorganization Act. The sample consists of 84 small entrepreneurial firms. The data are gathered from the reorganisation documents provided by courts. The variables measure the background of the firm, legal reorganisation proceedings, reorganisation plan, financial ratios, and payment default. In all, 39 (46%) reorganised firms have bankrupted. Two models are estimated by stepwise logistic regression analysis based on financial and non-financial variables. In general, non-financial variables outperform financial variables in prediction. The results are compared with those of the cluster analysis.

Online publication date: Sat, 07-Mar-2009

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