Determinants and consequences of financial distress: review of the empirical literature |
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Authors: | Ahsan Habib Mabel D' Costa Hedy Jiaying Huang Md Borhan Uddin Bhuiyan Li Sun |
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Institution: | School of Accountancy, Massey University, Auckland, New Zealand |
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Abstract: | We synthesise the empirical literature on the determinants and consequences of financial distress, critique the findings and offer suggestions for future research. We categorise these indicators into (i) firm-level fundamental determinants, (ii) macroeconomic determinants and (iii) firm-level corporate governance determinants. We categorise the consequences into (i) financial reporting and auditing consequences, (ii) firm-level operational consequences, (iii) capital market consequences and (iv) corporate governance consequences. We suggest that future research can make a more meaningful contribution, by developing more comprehensive models of predicting financial distress which will entail a departure from the current partial analysis to a more holistic complex analysis. |
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Keywords: | Financial distress Bankruptcies Corporate governance Financial reporting Capital markets |
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