Growth Patterns of Small Manufacturing Firms Before Failure: Interconnections with Financial Ratios and Nonfinancial Variables

Authors

  • Oliver Lukason Faculty of Economics and Business Administration, Tartu University
  • Erkki K. Laitinen Faculty of Business Studies, Accounting and Finance, University of Vaasa
  • Arto Suvas Faculty of Business Studies, Accounting and Finance, University of Vaasa

DOI:

https://doi.org/10.24867/IJIEM-2015-2-108

Keywords:

bankruptcy, failure process, financial ratios, growth patterns, managers’ characteristics

Abstract

This study focuses on the pre-failure growth in total assets, debt and sales of bankrupted manufacturing firms. Based on a sample of 128 Estonian firms, it is shown that two distinct growth patterns can be outlined. When the first pattern shows a gradual decline, then the other characterizes a more eclectic growth behavior. Several classical financial ratios have significantly different values through the established two patterns. Managers’ characteristics do not vary among the established patterns.

 

Article history: Received (02.12.2014); Revised (22.05.2015); Accepted (21.06.2015)  

Author Biographies

  • Oliver Lukason, Faculty of Economics and Business Administration, Tartu University

     

     

  • Erkki K. Laitinen, Faculty of Business Studies, Accounting and Finance, University of Vaasa

     

     

  • Arto Suvas, Faculty of Business Studies, Accounting and Finance, University of Vaasa

     

     

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Published

2015-09-30

Issue

Vol. 6 No. 2 (2015)

Section

Original Research Article

License

Copyright (c) 2023 International Journal of Industrial Engineering and Management

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How to Cite

Growth Patterns of Small Manufacturing Firms Before Failure: Interconnections with Financial Ratios and Nonfinancial Variables. (2015). International Journal of Industrial Engineering and Management, 6(2), 59-66. https://doi.org/10.24867/IJIEM-2015-2-108