Exporters’ failure predictors and processes: a multi-country analysis based on the theoretical concept of firms’ financial crisis types

Abstract

This study aims to identify the financial predictors and processes of (non-)bankrupt exporters’ failure in five European countries. A novel theoretical concept of financial processes based on the dynamic evolution of different types of financial crises was created. Relying on gaps in the literature, the study answers five research questions (RQs) by using financial data of 15,551 (non-)bankrupted firms. First, the empirical analysis suggests that from the four crisis types, solvency and profitability crises are the most important failure predictors generally, and second, also in different stages for the majority of studied financial processes. Among the eight financial processes detected based on the failure probability evolvement during 3 years, survived firms are mainly subject to persistent absence of failure risk, while exactly the opposite occurs for half of the bankrupt firms. Concerning firm-level characteristics, firm age mainly determines the prevalence of these processes, while export intensity plays a modest role. The empirical section is finalized with the development of high-accuracy failure prediction models for exporting firms, enabling the extension of the scientific findings to financial practice. As the main contribution to the extant literature, the article presents a holistic analysis of the financial dynamics of (non-)bankrupting exporting firms.

Keywords

• Firm’s financial crisis types
• financial ratios
• failure prediction
• failure processes
• exporters
• G33