Prediction of corporate failure research typically focused on the design of multivariate prediction models for the discrimination betw een failed and non-failed firms. This research atracted some criticism due to the inability to formulate generally applicable models. Several reasons may have led to the im possibility of formulating such models: it has been argued that firms suffering financial distress may have incentives to manipulate accounting information in order to increase users’ confidence; statisti cal techniques could overadjust prediction models; and finally, the existence of different failure processes is not considered by prior research. The main objective of the present research is to investigate the unique characteristics of failed companies, the reasons for each particular failure and the presence of different failure processes. The present study aims to be the first step in the opening of a new stage in the development of a theoretical framework on corporate failure. It is assumed that there exist different paths to failure, instead of a simple differentiation between healthy and failed firms. This is the main contribution of the paper, which is relevant to both researchers and practitioners. It opens up new possibilities for future research, following new experimental designs. For practitioners, it constitutes a new framework for the development of decisi on-aid tools (raising the opportunity to use decision making systems based on different rules or models for different paths)
