A review of the limitations of financial failure prediction research
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 predi...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Universidad de Murcia
2023-07-01
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| Series: | Revista de Contabilidad: Spanish Accounting Review |
| Subjects: | |
| Online Access: | https://revistas.um.es/rcsar/article/view/453041 |
| _version_ | 1797789051208597504 |
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| author | Erkki K. Laitinen María-del-Mar Camacho-Miñano Nora Muñoz-Izquierdo |
| author_facet | Erkki K. Laitinen María-del-Mar Camacho-Miñano Nora Muñoz-Izquierdo |
| author_sort | Erkki K. Laitinen |
| collection | DOAJ |
| description |
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.
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| first_indexed | 2024-03-13T01:45:16Z |
| format | Article |
| id | doaj.art-080621f223e74a6eb14c6aa0686751f8 |
| institution | Directory Open Access Journal |
| issn | 1138-4891 1988-4672 |
| language | English |
| last_indexed | 2024-03-13T01:45:16Z |
| publishDate | 2023-07-01 |
| publisher | Universidad de Murcia |
| record_format | Article |
| series | Revista de Contabilidad: Spanish Accounting Review |
| spelling | doaj.art-080621f223e74a6eb14c6aa0686751f82023-07-03T08:49:49ZengUniversidad de MurciaRevista de Contabilidad: Spanish Accounting Review1138-48911988-46722023-07-0126210.6018/rcsar.453041A review of the limitations of financial failure prediction researchErkki K. Laitinen0María-del-Mar Camacho-Miñano1Nora Muñoz-Izquierdo2University of VaasaComplutense University of MadridCentro Universitario de Estudios Financieros-CUNEF 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. https://revistas.um.es/rcsar/article/view/453041Financial distressFinancial failureBankruptcyPredictionLimitations |
| spellingShingle | Erkki K. Laitinen María-del-Mar Camacho-Miñano Nora Muñoz-Izquierdo A review of the limitations of financial failure prediction research Revista de Contabilidad: Spanish Accounting Review Financial distress Financial failure Bankruptcy Prediction Limitations |
| title | A review of the limitations of financial failure prediction research |
| title_full | A review of the limitations of financial failure prediction research |
| title_fullStr | A review of the limitations of financial failure prediction research |
| title_full_unstemmed | A review of the limitations of financial failure prediction research |
| title_short | A review of the limitations of financial failure prediction research |
| title_sort | review of the limitations of financial failure prediction research |
| topic | Financial distress Financial failure Bankruptcy Prediction Limitations |
| url | https://revistas.um.es/rcsar/article/view/453041 |
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