Maria-del-Mar Camacho-Miñano is assistant professor at Department of Financial Economics and Accounting II, Complutense University of Madrid.
Which Characteristics Predict the Survival of Insolvent Firms? An SME Reorganization Prediction Model
Article first published online: 25 OCT 2013
© 2013 International Council for Small Business
Journal of Small Business Management
How to Cite
Camacho-Miñano, M.-d.-M., Segovia-Vargas, M.-J. and Pascual-Ezama, D. (2013), Which Characteristics Predict the Survival of Insolvent Firms? An SME Reorganization Prediction Model. Journal of Small Business Management. doi: 10.1111/jsbm.12076
- Article first published online: 25 OCT 2013
The negative impact of insolvency, especially in small and medium enterprises, informs the objective of this paper: to study the characteristics of bankrupt firms to achieve a preventive diagnosis for reorganization by means of artificial intelligence (AI) methodologies such as rough set and PART methods. The AI models obtained show not only the key variables to predict insolvency, but also their relations and the critical values. Using only five firm characteristics (sector, size, number of shareholdings, return on assets, and cash ratio), our model could reduce delays and costs, since it is able to predict which firms will undergo reorganization or liquidation before the legal procedure.