Revisión de las limitaciones de la investigación sobre predicción de quiebras financieras

The objective of this paper is to critically evaluate the main weaknesses associated with the limitations of financial failure prediction research studies. For more than 80 years, researchers have unsuccessfully studied ways to create a general theory of financial failure, which is useful for prediction. In this paper, we review the main boundaries of failure prediction research through a critical evaluation of previous papers and our own approach from the research experience. Our findings corroborate that these studies suffer from a lack of theoretical and dynamic research, an unclear definition of failure, deficiencies with the quality of financial statement data and a shortfall in the diagnostic analyses of failure. The most relevant implications for future research in this area are also outlined. This is the first study to analyse in deep the caveats of financial failure prediction studies, a crucial topic nowadays due to the hints of an economic crisis caused by the Covid-19 pandemic.El objetivo de este artículo es evaluar críticamente los principales puntos débiles asociados a las limitaciones de los estudios de investigación sobre predicción de quiebras financieras. Durante más de 80 años, los investigadores han estudiado sin éxito la forma de crear una teoría general del fracaso financiero que sea útil para la predicción. En este artículo, revisamos los principales límites de la investigación sobre predicción de quiebras mediante una evaluación crítica de trabajos anteriores y nuestro propio enfoque a partir de la experiencia investigadora. Nuestras conclusiones corroboran que estos estudios adolecen de una falta de investigación teórica y dinámica, una definición poco clara del fracaso, deficiencias con la calidad de los datos de los estados financieros y un déficit en los análisis de diagnóstico del fracaso. También se esbozan las implicaciones más relevantes para futuras investigaciones en este ámbito. Se trata del primer estudio que analiza en profundidad las salvedades de los estudios de predicción de la quiebra financiera, un tema crucial en la actualidad debido a los atisbos de crisis económica provocados por la pandemia del Covid-19

Revisión de las limitaciones de la investigación sobre predicción de quiebras financieras

The objective of this paper is to critically evaluate the main weaknesses associated with the limitations of financial failure prediction research studies. For more than 80 years, researchers have unsuccessfully studied ways to create a general theory of financial failure, which is useful for prediction. In this paper, were view the main boundaries of failure prediction research through a critical evaluation of previous papers and our own approach from the research experience. Our findings corroborate that these studies suffer from a lack of theoretical and dynamic research, an unclear definition of failure, deficiencies with the quality of financial statement data and a shortfall in the diagnostic analyses of failure. The most relevant implications for future research in this area are also outlined. This is the first study to analyse in deep the caveats of financial failure prediction studies, a crucial topic nowadays due to the hints of an economic crisis caused by the Covid-19 pandemic.El objetivo de este artículo es evaluar críticamente los principales puntos débiles asociados a las limitaciones de los estudios de investigación sobre predicción de quiebras financieras. Durante más de 80 años, los investigadores han estudiado sin éxito la forma de crear una teoría general del fracaso financiero que sea útil para la predicción. En este artículo, revisamos los principales límites de la investigación sobre predicción de quiebras mediante una evaluación crítica de trabajos anteriores y nuestro propio enfoque a partir de la experiencia investigadora. Nuestras conclusiones corroboran que estos estudios adolecen de una falta de investigación teórica y dinámica, una definición poco clara del fracaso, deficiencias con la calidad de los datos de los estados financieros y un déficit en los análisis de diagnóstico del fracaso. También se esbozan las implicaciones más relevantes para futuras investigaciones en este ámbito. Se trata del primer estudio que analiza en profundidad las salvedades de los estudios de predicción de la quiebra financiera, un tema crucial en la actualidad debido a los atisbos de crisis económica provocados por la pandemia del Covid-19.©2023 ASEPUC. Published by EDITUM - Universidad de Murcia. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)fi=vertaisarvioitu|en=peerReviewed

An Empirical Analysis of the Forecast of Corporate Financial Distress in the European Energy Sector

openExploring the causes of corporate financial distress has been a topic of extensive discussion and research in the field of finance. Over the years, scholars and experts have dedicated their efforts to unraveling the intricacies behind financial struggles faced by businesses. The enduring interest in this subject can be attributed to the profound consequences that corporate financial distress can bring. When a company finds itself in a state of financial distress, it often marks a critical turning point that could lead to insolvency or even bankruptcy. This represents the ultimate failure of the company and has wide-ranging impacts that go beyond its immediate boundaries. Employees are affected by potential job losses, stakeholders face financial losses, connected companies may experience disruptions in their operations, and the overall economy can suffer. The costs associated with corporate financial distress are substantial and can take different forms. Direct costs include expenses related to legal proceedings, asset liquidation, and settling outstanding debts. Indirect costs can arise from the erosion of the company's reputation, diminished investor confidence, restricted access to credit, and the ripple effect felt throughout the supply chain. Given the prevalence and far-reaching consequences of corporate financial distress, researchers and experts have delved into the topic with great fervor. Their aim is to develop models, methodologies, and strategies that can help identify early warning signs of financial distress and enable proactive measures to be taken. By doing so, they seek to protect companies from the brink of failure and promote stability and growth in the broader economy. The study of corporate financial distress has yielded valuable insights into the various factors that contribute to these challenges. Researchers have examined aspects such as poor financial management practices, ineffective governance structures, unfavorable economic conditions, industry-specific challenges, and vulnerabilities unique to individual companies. Ultimately, the research conducted in this field not only sheds light on the causes and consequences of corporate financial distress but also strives to provide guidance for companies, investors, and policymakers. By understanding the dynamics of financial distress, stakeholders can make informed decisions, implement preventive measures, and contribute to the resilience and success of businesses in the face of adversity.Exploring the causes of corporate financial distress has been a topic of extensive discussion and research in the field of finance. Over the years, scholars and experts have dedicated their efforts to unraveling the intricacies behind financial struggles faced by businesses. The enduring interest in this subject can be attributed to the profound consequences that corporate financial distress can bring. When a company finds itself in a state of financial distress, it often marks a critical turning point that could lead to insolvency or even bankruptcy. This represents the ultimate failure of the company and has wide-ranging impacts that go beyond its immediate boundaries. Employees are affected by potential job losses, stakeholders face financial losses, connected companies may experience disruptions in their operations, and the overall economy can suffer. The costs associated with corporate financial distress are substantial and can take different forms. Direct costs include expenses related to legal proceedings, asset liquidation, and settling outstanding debts. Indirect costs can arise from the erosion of the company's reputation, diminished investor confidence, restricted access to credit, and the ripple effect felt throughout the supply chain. Given the prevalence and far-reaching consequences of corporate financial distress, researchers and experts have delved into the topic with great fervor. Their aim is to develop models, methodologies, and strategies that can help identify early warning signs of financial distress and enable proactive measures to be taken. By doing so, they seek to protect companies from the brink of failure and promote stability and growth in the broader economy. The study of corporate financial distress has yielded valuable insights into the various factors that contribute to these challenges. Researchers have examined aspects such as poor financial management practices, ineffective governance structures, unfavorable economic conditions, industry-specific challenges, and vulnerabilities unique to individual companies. Ultimately, the research conducted in this field not only sheds light on the causes and consequences of corporate financial distress but also strives to provide guidance for companies, investors, and policymakers. By understanding the dynamics of financial distress, stakeholders can make informed decisions, implement preventive measures, and contribute to the resilience and success of businesses in the face of adversity

Bank Portfolio Structure and Absorption Theory of Economic Development: A Theoretical Proposition

The focus of this article was on theoretical proposition of Bank Portfolio Structure and Economic Absorption Theory of economic development. Specifically, this work sought to establish the basis of bank portfolio rigidity and to identify the causes of economic absorption problems and their implications on economic development. The theoretical and conceptual research designs were used. Existing literatures were reviewed using archival retrieval approach, library search and internet exploration. The information obtained was judgmentally, logically and qualitatively analyzed. It was discovered among other aspects, that, bank portfolio rigidity stems from regulatory policy defects using inconsistent monetary policy tools such as high liquidity ratio and cash ratio, etc. and compelling the banks to adhere to the regulatory requirement, as well as lack of adequate and quality stock of infrastructure and technology as the basic causes of economic absorption problems. Above all, low level of economic absorption has been discovered to hinder effective contributions of banks to economic development. Following from above, it was therefore recommended that regulatory tools used by Central Banks should be aligned with the development needs of the economy and the direction of governments. The monetary policy tools such as liquidity and cash ratios should also be moderated and stabilized for stable bank portfolio performance as well as aggressive improvement in the stock and quality of infrastructure and technology within an economy. With the new theory, it is expected that policy formulations and adjustments concerning bank portfolio structure and management would be designed with adequate flexibility and focus on long term loans and investments coupled with improved stock and quality of infrastructure to enhance economic development. This theory therefore provides another frontier of research on bank portfolio structure and contributions to economic development. Keywords: Bank portfolio structure, Structural rigidity, Economic absorption, Economic developmen

‘Big data analytics’ for construction firms insolvency prediction models

In a pioneering effort, this study is the first to develop a construction firms insolvency prediction model (CF-IPM) with Big Data Analytics (BDA); combine qualitative and quantitative variables; advanced artificial intelligence tools such as Random Forest and Bart Machine; and data of all sizes of construction firms (CF), ensuring wide applicabilityThe pragmatism paradigm was employed to allow the use of mixed methods. This was necessary to allow the views of the top management team (TMT) of failed and existing construction firms to be captured using a qualitative approach.TMT members of 13 existing and 14 failed CFs were interviewed. Interview result was used to create a questionnaire with over hundred qualitative variables. A total of 272 and 259 (531) usable questionnaires were returned for existing and failed CFs respectively. The data of the 531 questionnaires were oversample to get a total questionnaire sample of 1052 CFs. The original and matched sample financial data of the firms were downloaded. Using Cronbach’s alpha and factor analysis, qualitative variables were reduced to 13 (Q1 to Q13) while11 financial ratios (i.e. quantitative variables) (R1 and R11) reported by large and MSM CFs were identified for the sample CFs.The BDA system was set up with the Amazon Web Services Elastic Compute Cloud using five ‘Instances’ as Hadoop DataNodes and one as NameNode. The NameNode was configured as Spark Master. Eleven variable selection methods and three voting systems were used to select the final seven qualitative and seven quantitative variables, which were used to develop 13 BDA-CF-IPMs. The Decision Tree BDA-CF-IPM was the model of choice in this study because it had high accuracy, low Type I error and transparency. The most important variables (factors) affecting insolvency of construction firms according to the best model are returned on total assets; liquidity; solvency ratio; top management characteristics; strategic issues and external relations; finance and conflict related issues; industry contract/project knowledge

Artificial Intelligence and Cognitive Computing

Artificial intelligence (AI) is a subject garnering increasing attention in both academia and the industry today. The understanding is that AI-enhanced methods and techniques create a variety of opportunities related to improving basic and advanced business functions, including production processes, logistics, financial management and others. As this collection demonstrates, AI-enhanced tools and methods tend to offer more precise results in the fields of engineering, financial accounting, tourism, air-pollution management and many more. The objective of this collection is to bring these topics together to offer the reader a useful primer on how AI-enhanced tools and applications can be of use in today’s world. In the context of the frequently fearful, skeptical and emotion-laden debates on AI and its value added, this volume promotes a positive perspective on AI and its impact on society. AI is a part of a broader ecosystem of sophisticated tools, techniques and technologies, and therefore, it is not immune to developments in that ecosystem. It is thus imperative that inter- and multidisciplinary research on AI and its ecosystem is encouraged. This collection contributes to that

Enterprise risk management: developing a strategic ERM alignment framework- Finance sector

This thesis was submitted for the award of Doctor of Philosophy and was awarded by Brunel University London.This thesis investigates the evolutionary process of risk management practices associated with the implementation of enterprise risk management (ERM) across the finance sector. Despite the increasing number of ERM adoptions in the finance industry in recent years, ERM was still at an early stage of development and further research is recommended. The literature review identifies a gap in the ERM literature, prompting the development of a theoretical framework to investigate key organisational factors critical to effective implementation of the strategic framework. A strategic ERM Alignment Framework was developed to address key shortcomings of existing ERM practices in the industry and to provide practical guidance to academics and practitioners. The research was conducted as a two-stage empirical study in the finance sector, employing sequential mixed methods of data collection and analysis: a series of 35 semi-structured qualitative interviews with senior enterprise risk managers representing a variety of financial organisations, followed by a quantitative questionnaire survey of 115 finance industry professionals. The literature supports the industry view of continuous internal and external pressures towards ERM implementation across financial organisations. The research findings confirm that ERM is perceived to have slowly transformed from a process of compliance to a strategic tool and become a source of value creation and competitive advantage. The study also shows that aligning ERM with core organisational strategies and enterprise risk culture have been the underlying factors driving a strategic ERM framework sustainable over time. Inadequate senior management support for ERM and an insufficiently dynamic enterprise risk culture are identified as the greatest challenges to ERM sustainability. Major benefits of ERM are revealed as well informed risk-adjusted decision making and a strategic enterprise-wide view of key risks. The main contribution to knowledge of this research is the development of a strategic ERM Alignment Framework for the finance sector and practical guidelines for its effective implementation. Specifically, this research offers academics and finance industry practitioners a better understanding of organisational factors critical to the implementation of a strategic ERM Alignment Framework, supported by empirical evidence. Key limitation of the research was identified as the complexity of the ERM Alignment Framework that can be mitigated by undertaking future research to simplify the framework following its practical application. The researcher recommends that future research should focus on intangible elements and qualities of ERM that are important to the Alignment Framework, such as developing a strong and consistent enterprise risk culture, or investigating how the framework can add value to the organisation

Risk Management for the Future

A large part of academic literature, business literature as well as practices in real life are resting on the assumption that uncertainty and risk does not exist. We all know that this is not true, yet, a whole variety of methods, tools and practices are not attuned to the fact that the future is uncertain and that risks are all around us. However, despite risk management entering the agenda some decades ago, it has introduced risks on its own as illustrated by the financial crisis. Here is a book that goes beyond risk management as it is today and tries to discuss what needs to be improved further. The book also offers some cases

Management, Technology and Learning for Individuals, Organisations and Society in Turbulent Environments

This book presents the collection of fifty papers which were presented in the Second International Conference on BUSINESS SUSTAINABILITY 2011 - Management, Technology and Learning for Individuals, Organisations and Society in Turbulent Environments , held in Póvoa de Varzim, Portugal, from 22ndto 24thof June, 2011.The main motive of the meeting was growing awareness of the importance of the sustainability issue. This importance had emerged from the growing uncertainty of the market behaviour that leads to the characterization of the market, i.e. environment, as turbulent. Actually, the characterization of the environment as uncertain and turbulent reflects the fact that the traditional technocratic and/or socio-technical approaches cannot effectively and efficiently lead with the present situation. In other words, the rise of the sustainability issue means the quest for new instruments to deal with uncertainty and/or turbulence. The sustainability issue has a complex nature and solutions are sought in a wide range of domains and instruments to achieve and manage it. The domains range from environmental sustainability (referring to natural environment) through organisational and business sustainability towards social sustainability. Concerning the instruments for sustainability, they range from traditional engineering and management methodologies towards “soft” instruments such as knowledge, learning, and creativity. The papers in this book address virtually whole sustainability problems space in a greater or lesser extent. However, although the uncertainty and/or turbulence, or in other words the dynamic properties, come from coupling of management, technology, learning, individuals, organisations and society, meaning that everything is at the same time effect and cause, we wanted to put the emphasis on business with the intention to address primarily companies and their businesses. Due to this reason, the main title of the book is “Business Sustainability 2.0” but with the approach of coupling Management, Technology and Learning for individuals, organisations and society in Turbulent Environments. Also, the notation“2.0” is to promote the publication as a step further from our previous publication – “Business Sustainability I” – as would be for a new version of software. Concerning the Second International Conference on BUSINESS SUSTAINABILITY, its particularity was that it had served primarily as a learning environment in which the papers published in this book were the ground for further individual and collective growth in understanding and perception of sustainability and capacity for building new instruments for business sustainability. In that respect, the methodology of the conference work was basically dialogical, meaning promoting dialog on the papers, but also including formal paper presentations. In this way, the conference presented a rich space for satisfying different authors’ and participants’ needs. Additionally, promoting the widest and global learning environment and participation, in accordance with the Conference's assumed mission to promote Proactive Generative Collaborative Learning, the Conference Organisation shares/puts open to the community the papers presented in this book, as well as the papers presented on the previous Conference(s). These papers can be accessed from the conference webpage (http://labve.dps.uminho.pt/bs11). In these terms, this book could also be understood as a complementary instrument to the Conference authors’ and participants’, but also to the wider readerships’ interested in the sustainability issues. The book brought together 107 authors from 11 countries, namely from Australia, Belgium, Brazil, Canada, France, Germany, Italy, Portugal, Serbia, Switzerland, and United States of America. The authors “ranged” from senior and renowned scientists to young researchers providing a rich and learning environment. At the end, the editors hope, and would like, that this book to be useful, meeting the expectation of the authors and wider readership and serving for enhancing the individual and collective learning, and to incentive further scientific development and creation of new papers. Also, the editors would use this opportunity to announce the intention to continue with new editions of the conference and subsequent editions of accompanying books on the subject of BUSINESS SUSTAINABILITY, the third of which is planned for year 2013.info:eu-repo/semantics/publishedVersio