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Failure of exporting and non-exporting firms: do the financial predictors vary?

Failure of exporting and non-exporting firms: do the financial predictors vary? The purpose of this paper is to find out whether the financial predictors of failure differ for exporting and non-exporting firms.DesignThe study is based on two samples of French manufacturing micro firms from Amadeus database. Samples of 468 exporting and 1,148 non-exporting firms were divided equally to survived and bankrupted firms. Logistic regression method was used with five financial ratios portraying liquidity, solidity, cash flow sufficiency, profitability and productivity.FindingsThe findings suggest that cash flow sufficiency and solidity were important predictors in both firm groups, although the latter was more important in case of exporters. Liquidity was important in case of non-exporters, while profitability in case of exporters. Productivity was not a significant predictor. With these variables, failure of exporters was predicted with a higher accuracy.OriginalityThis paper contributes to an under-researched area in the failure prediction and international business literature, namely, it outlines whether failure predictors are the same for similar exporting and non-exporting firms. The results indicate that some predictors differ and similar ones can have different importance for exporters and non-exporters. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of International Business and Strategy Emerald Publishing

Failure of exporting and non-exporting firms: do the financial predictors vary?

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References (46)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2059-6014
DOI
10.1108/ribs-02-2018-0015
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to find out whether the financial predictors of failure differ for exporting and non-exporting firms.DesignThe study is based on two samples of French manufacturing micro firms from Amadeus database. Samples of 468 exporting and 1,148 non-exporting firms were divided equally to survived and bankrupted firms. Logistic regression method was used with five financial ratios portraying liquidity, solidity, cash flow sufficiency, profitability and productivity.FindingsThe findings suggest that cash flow sufficiency and solidity were important predictors in both firm groups, although the latter was more important in case of exporters. Liquidity was important in case of non-exporters, while profitability in case of exporters. Productivity was not a significant predictor. With these variables, failure of exporters was predicted with a higher accuracy.OriginalityThis paper contributes to an under-researched area in the failure prediction and international business literature, namely, it outlines whether failure predictors are the same for similar exporting and non-exporting firms. The results indicate that some predictors differ and similar ones can have different importance for exporters and non-exporters.

Journal

Review of International Business and StrategyEmerald Publishing

Published: Nov 26, 2018

Keywords: Financial ratios; Failure prediction; (Non-)exporting firms; Export effect

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