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The influence of firm-specific and industry-specific risk factors on the probability of bankruptcy of Dutch firms

Boerkamp, E.P.G. (2017) The influence of firm-specific and industry-specific risk factors on the probability of bankruptcy of Dutch firms.

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Abstract:This research aims at finding firm-specific and industry-specific variables that exert an influence on the probability of bankruptcy of Dutch private firms. The outcomes indicate that the integration of non-financial risk factors improves the bankruptcy prediction model. For example, working capital management risk and access to financing have shown to have practical relevance and are statistically significant related to the probability of bankruptcy. Firms should try to optimize the cash conversion cycle and try to eliminate agency problems as much as possible in order to obtain external financing. The conducted survival analyses show that firms that have less access to financing are almost three times more likely to go bankrupt. The inclusion of industry variables does not significantly add to the bankruptcy prediction model, but especially industry barriers are important to take into consideration as they individually can have a significant impact on firms. In addition, it has been found that the interest coverage ratio and Altman’s Z-score are good indicators of the probability of bankruptcy, and can therefore be of great importance to firms, financial institutions and researchers.
Item Type:Essay (Master)
Clients:
SynnoFin, Enschede, The Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/73236
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