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1 – 10 of over 1000
Article
Publication date: 28 November 2023

Yann Carin and Jean-François Brocard

This paper aims to propose an analysis of financial regulation practices, identified thanks to an extensive benchmark carried out in eight European professional sports leagues.

Abstract

Purpose

This paper aims to propose an analysis of financial regulation practices, identified thanks to an extensive benchmark carried out in eight European professional sports leagues.

Design/methodology/approach

Between 1970 and 2018, 81 French football clubs went bankrupt. The paper proposes an analysis of financial regulation practices in eight European professional sports leagues to enhance the prevention of bankruptcy of French football clubs. Three research questions are addressed: What are the financial and accounting disclosure practices in the main professional leagues? What assessment tools are employed to evaluate the financial risk and budgetary feasibility? What financial support measures exist for clubs and how are insolvency proceedings initiated by clubs? To identify financial regulation practices in professional sport, a selection of leagues was made based on their economic importance, specific regulatory tools used, and their approach to financial difficulties and the handling of insolvency proceedings.

Findings

Through an examination of financial regulation practices in other leagues, three main findings are highlighted: The significance of required financial documents and deadlines varies depending on the competition organizer; some leagues utilize ratio-based assessments rather than relying solely on opinions from financial oversight bodies; certain leagues have established assistance processes for troubled clubs as opposed to punitive measures resulting in administrative regulations.

Practical implications

This study proposes new financial regulation modalities to prevent the bankruptcy of French football clubs. Firstly, a reform management control is suggested. Secondly, the engagement of stakeholders in bankruptcy prevention is recommended. Lastly, the implementation of a dedicated policy to support clubs facing difficulties is proposed.

Originality/value

The French football federation and the professional league are important actors in the European football. Many bankruptcies are noted in these championships and since the COVID crisis, the financial situation of the clubs has deteriorated, pointing to a strong risk of bankruptcy in the coming years.

Details

Sport, Business and Management: An International Journal, vol. 14 no. 2
Type: Research Article
ISSN: 2042-678X

Keywords

Article
Publication date: 17 March 2023

Stewart Jones

This study updates the literature review of Jones (1987) published in this journal. The study pays particular attention to two important themes that have shaped the field over the…

Abstract

Purpose

This study updates the literature review of Jones (1987) published in this journal. The study pays particular attention to two important themes that have shaped the field over the past 35 years: (1) the development of a range of innovative new statistical learning methods, particularly advanced machine learning methods such as stochastic gradient boosting, adaptive boosting, random forests and deep learning, and (2) the emergence of a wide variety of bankruptcy predictor variables extending beyond traditional financial ratios, including market-based variables, earnings management proxies, auditor going concern opinions (GCOs) and corporate governance attributes. Several directions for future research are discussed.

Design/methodology/approach

This study provides a systematic review of the corporate failure literature over the past 35 years with a particular focus on the emergence of new statistical learning methodologies and predictor variables. This synthesis of the literature evaluates the strength and limitations of different modelling approaches under different circumstances and provides an overall evaluation the relative contribution of alternative predictor variables. The study aims to provide a transparent, reproducible and interpretable review of the literature. The literature review also takes a theme-centric rather than author-centric approach and focuses on structured themes that have dominated the literature since 1987.

Findings

There are several major findings of this study. First, advanced machine learning methods appear to have the most promise for future firm failure research. Not only do these methods predict significantly better than conventional models, but they also possess many appealing statistical properties. Second, there are now a much wider range of variables being used to model and predict firm failure. However, the literature needs to be interpreted with some caution given the many mixed findings. Finally, there are still a number of unresolved methodological issues arising from the Jones (1987) study that still requiring research attention.

Originality/value

The study explains the connections and derivations between a wide range of firm failure models, from simpler linear models to advanced machine learning methods such as gradient boosting, random forests, adaptive boosting and deep learning. The paper highlights the most promising models for future research, particularly in terms of their predictive power, underlying statistical properties and issues of practical implementation. The study also draws together an extensive literature on alternative predictor variables and provides insights into the role and behaviour of alternative predictor variables in firm failure research.

Details

Journal of Accounting Literature, vol. 45 no. 2
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 22 June 2022

Li (Lily) Zheng Brooks and Jean B. McGuire

This study aims to investigate the cross-sectional differences on the association between corporate social responsibility (CSR) and future bankruptcy along the dimensions of…

Abstract

Purpose

This study aims to investigate the cross-sectional differences on the association between corporate social responsibility (CSR) and future bankruptcy along the dimensions of political connection and corporate governance strength. This study intends to provide evidence on the tangible benefits for firms to invest in social capital of CSR activities and offer insights on what firms may benefit more from CSR expenditure.

Design/methodology/approach

Running a logistic regression on the determinants of bankruptcy model after controlling for financial stress factors based on prior literature, this study examines the moderating effect of political connection and corporate governance on the association between corporate social responsibility and future bankruptcy.

Findings

Current study documents that the negative association between corporate social responsibility and future bankruptcy is only significant for politically connected firms, but insignificant for non-politically connected firms. Specifically, the authors find that one standard deviation increase of CSR expenditure significantly reduces the propensity of future bankruptcy by 53.20% for politically-connected firms. Conversely, the negative relation between CSR only exits for firms with weak corporate governance but do not exit for firms with strong corporate governance.

Research limitations/implications

Current study provides evidence on the tangible benefits for firms to invest in social capital of CSR activities and offers additional insights on what firms may benefit more from CSR expenditure.

Originality/value

Current study extends the research to examine the cross-sectional variations in the negative association between CSR performance and the propensity of bankruptcy. The positive moderating effect of political connection on CSR and bankruptcy suggests that political connection and CSR are complements in reducing the propensity of future bankruptcy. A more pronounced negative association between CSR and bankruptcy for firms with weaker governance suggests that firms with weak corporate governance benefits more in engaging CSR activities than firms with strong corporate governance.

Details

Meditari Accountancy Research, vol. 31 no. 5
Type: Research Article
ISSN: 2049-372X

Keywords

Open Access
Article
Publication date: 20 November 2023

Asad Mehmood and Francesco De Luca

This study aims to develop a model based on the financial variables for better accuracy of financial distress prediction on the sample of private French, Spanish and Italian…

1437

Abstract

Purpose

This study aims to develop a model based on the financial variables for better accuracy of financial distress prediction on the sample of private French, Spanish and Italian firms. Thus, firms in financial difficulties could timely request for troubled debt restructuring (TDR) to continue business.

Design/methodology/approach

This study used a sample of 312 distressed and 312 non-distressed firms. It includes 60 French, 21 Spanish and 231 Italian firms in both distressed and non-distressed groups. The data are extracted from the ORBIS database. First, the authors develop a new model by replacing a ratio in the original Z”-Score model specifically for financial distress prediction and estimate its coefficients based on linear discriminant analysis (LDA). Second, using the modified Z”-Score model, the authors develop a firm TDR probability index for distressed and non-distressed firms based on the logistic regression model.

Findings

The new model (modified Z”-Score), specifically for financial distress prediction, represents higher prediction accuracy. Moreover, the firm TDR probability index accurately depicts the probabilities trend for both groups of distressed and non-distressed firms.

Research limitations/implications

The findings of this study are conclusive. However, the sample size is small. Therefore, further studies could extend the application of the prediction model developed in this study to all the EU countries.

Practical implications

This study has important practical implications. This study responds to the EU directive call by developing the financial distress prediction model to allow debtors to do timely debt restructuring and thus continue their businesses. Therefore, this study could be useful for practitioners and firm stakeholders, such as banks and other creditors, and investors.

Originality/value

This study significantly contributes to the literature in several ways. First, this study develops a model for predicting financial distress based on the argument that corporate bankruptcy and financial distress are distinct events. However, the original Z”-Score model is intended for failure prediction. Moreover, the recent literature suggests modifying and extending the prediction models. Second, the new model is tested using a sample of firms from three countries that share similarities in their TDR laws.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 23 May 2023

Liu Wang and Yong Wang

The business world today is witnessing ever-growing disruption. This study highlights corporate social responsibility (CSR) as an effective strategy for firms in disrupted…

Abstract

Purpose

The business world today is witnessing ever-growing disruption. This study highlights corporate social responsibility (CSR) as an effective strategy for firms in disrupted industries to consider in order to differentiate themselves and to increase their chance of survival facing disruption.

Design/methodology/approach

In this study, the authors test the hypotheses using a multilevel modeling (MLM) design to capture the group and intergroup effects at the industry level and at the firm level. The empirical analysis is based on a panel sample of 1,193 firms over the 10-year period from 2010 to 2019.

Findings

The empirical analysis indicates that CSR has a positive impact on corporate financial stability and the effect is especially significant for firms in disrupted industries. Further investigation suggests that this positive effect largely runs through traits of the social pillar, such as human rights, employee relations, customer protection, product responsibility and community impact. The results are robust after controlling for other firm-specific characteristics and after addressing endogeneity concerns.

Originality/value

This study examines whether, and through which channel, CSR helps enhance corporate financial stability and mitigate bankruptcy risk in disrupted industries. To the best of the authors' knowledge, this study is the first attempt to explore the use of CSR as an effective strategic response to disruption. Further analysis indicates that the social capital built through CSR plays an important role in helping enhance corporate financial stability.

Details

Managerial Finance, vol. 49 no. 10
Type: Research Article
ISSN: 0307-4358

Keywords

Open Access
Article
Publication date: 16 March 2022

Michael Kuttner, Stefan Mayr, Christine Mitter and Christine Duller

Small- and medium-sized enterprises (SMEs) often lack adequate accounting systems and may even fail because of accounting inefficiencies. Indeed, accounting can mitigate the…

3613

Abstract

Purpose

Small- and medium-sized enterprises (SMEs) often lack adequate accounting systems and may even fail because of accounting inefficiencies. Indeed, accounting can mitigate the course of a crisis and support a troubled SME’s turnaround. Its impact on reorganization success, however, has scarcely been researched so far. Therefore, this paper aims to examine the effects of several accounting parameters, namely, the quality of accounting systems, quality of early warning systems, formal planning, the standard of financial accounting and reorganization planning on the short- and long-term success of court-supervised reorganization.

Design/methodology/approach

The impact of accounting on reorganization success is investigated in a sample of all SME bankruptcy cases with ten or more employees (n = 117) in Upper Austria in 2012 including data for short-term survival (in 2016) and long-term survival (in 2019).

Findings

This study found evidence that the general quality of accounting systems, the quality of early warning systems and written reorganization plans positively influence the outcomes of the analyzed court-supervised reorganizations of SMEs. In particular, the existence of a reorganization plan significantly increases the short- and long-term reorganization success by ensuring the efficient and effective use of resources in the reorganization process.

Practical implications

This study should increase the awareness of SMEs’ owner managers, consultants, creditors and legislators for the importance of accounting in the context of reorganization. The fact that the effect of accounting on reorganization success is less pronounced in the long-term view indicates the necessity of increasing the strategic focus in SMEs’ accounting instruments.

Originality/value

This study provides new evidence on the impact of specific accounting parameters on the short- and long-term success of the court-supervised reorganization of SMEs. Furthermore, this study points out the high relevance of reorganization plans for SMEs.

Details

Journal of Accounting & Organizational Change, vol. 19 no. 6
Type: Research Article
ISSN: 1832-5912

Keywords

Article
Publication date: 26 September 2023

Md Jahidur Rahman, Hongtao Zhu and Sihe Chen

This study aims to investigate the relationship between corporate social responsibility (CSR) and financial distress and the moderating effect of firm characteristics, auditor…

Abstract

Purpose

This study aims to investigate the relationship between corporate social responsibility (CSR) and financial distress and the moderating effect of firm characteristics, auditor characteristics and the Coronavirus disease 2019 (Covid-19) in China.

Design/methodology/approach

The research question is empirically examined on the basis of a data set of 1,257 Chinese-listed firms from 2011 to 2021. The dependent variable is financial distress risk, which is measured mainly by Z-score. CSR score is used as a proxy for CSR. Propensity score matching, two-stage least square and generalized method of moments are adopted to mitigate the potential endogeneity issue.

Findings

This study reveals that CSR can reduce financial distress. Specifically, results show an inverse relationship between CSR and financial distress, more significantly in non-state-owned enterprises, firms with non-BigN auditor and during Covid-19. The results are consistent and robust to endogeneity tests and sensitivity analyses.

Originality/value

This study enriches the literature on CSR and financial distress, resulting in a more attractive corporate environment, improved financial stability and more crisis-resistant economies in China.

Details

International Journal of Accounting & Information Management, vol. 31 no. 5
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 1 April 2022

A. Bhuvaneskumar, V.J. Sivakumar and Nancyprabha Pushparaj

The present study aims to determine and benchmark the performance of socially responsible companies (SRCs) in India based on the financial, value-added and combined performance…

Abstract

Purpose

The present study aims to determine and benchmark the performance of socially responsible companies (SRCs) in India based on the financial, value-added and combined performance indicators by addressing the climate change problems at the grass-root level.

Design/methodology/approach

The present study has used the traditional financial, value-added and combined performance indicators to evaluate and rank the performance of 14 SRCs under the Bombay stock exchange (BSE)-Greenex sustainability index. The technique for order performance by similarity to ideal solution (TOPSIS) and fuzzy analytic hierarchy process (FAHP) algorithms calculate performance scores and assign weights to the indicators from 2015 to 2019. Further, the Altman Z-score methodology has been applied to understand the SRCs propensity toward bankruptcy behavior. The parametric t-test is also performed on the outcomes of TOPSIS scores under different categories of indicators to check the statistical significance.

Findings

The performance scores of the TOPSIS algorithm indicate that the financial indicators of SRCs govern the firm performance significantly over the value-added indicators (VAIs). Further, parametric t-test results validate the outcomes of the performance scores by exhibiting that there is no significant difference between the traditional financial and VAIs at a 5% significance level. However, a few SRCs overall performance rankings have improved significantly after including VAIs. Moreover, the Altman Z-score results also reveal that most of the SRCs evaluated in the study are stable, showcasing consistent performance and absent from bankruptcy behavior.

Practical implications

The study has practical implications as follows: (1) to facilitate a clear understanding of investors and portfolio managers in selecting appropriate companies under socially responsible investing (SRI); (2) to provide portfolio diversification insights for domestic and international investors besides advocating the necessity of investing in better performing sustainable companies to safeguard their investments against the future uncertainty and (3) the study results would benefit the regulatory bodies to frame appropriate sustainability policy interventions at the organization level.

Originality/value

In the context of ambiguous inferences on the performance of SRI, no prior study has been conducted to assess the performance of SRCs in the Indian version of sustainability index BSE-Greenex.

Details

Benchmarking: An International Journal, vol. 30 no. 3
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 28 June 2022

Kofi Mintah Oware and King David Kweku Botchway

The purpose of this study is to examine the effect of moral and exchange capital of corporate social responsibility (CSR) disclosure on the financial distress likelihood of family…

Abstract

Purpose

The purpose of this study is to examine the effect of moral and exchange capital of corporate social responsibility (CSR) disclosure on the financial distress likelihood of family management firms in India.

Design/methodology/approach

The constructed data set (i.e. Morgan Stanley Capital International) and Kinder, Lydenberg and Domini social performance rating data format) consists of 66 firms with 655 firm-year observations for family-managed firms that practise sustainability reporting on the Indian stock market from 2010 to 2019.

Findings

The first findings show that current and previous year-two CSR disclosure reduces family management firms’ financial distress. The second findings show that the exchange capital of CSR disclosure does not influence the financial distress likelihood of family management firms in India. The third findings show that moral capital of CSR disclosure of the current year, previous year-one and previous year-two more than likely reduce financial distress likelihood of family management firms in India. This study is robust due to the lagged variables of the dependent variables.

Practical implications

Management investment must be high in moral capital to accrue social capital, but the success is dependent on a policy of continuous support for establishing family-related businesses. Similarly, society can benefit as the firm becomes attractive to green consumers as additions to the consumers of a CSR-driven firm. The consequences can cause firms to be more philanthropic to the community.

Originality/value

The novelty shows that to the best of the authors’ knowledge, no studies examine CSR disclosure’s moral and exchange capital on financial distress likelihood in India. Also, there is no evidence from the perspective of family management studies in CSR-financial distress likelihood nexus.

Article
Publication date: 10 October 2022

Ali Meftah Gerged, Shaojie Yao and Khaldoon Albitar

This study aims to investigate the possible implications of compliance with corporate governance (CG) provisions, including board composition and ownership structures, on the…

1008

Abstract

Purpose

This study aims to investigate the possible implications of compliance with corporate governance (CG) provisions, including board composition and ownership structures, on the firm’s likelihood of falling into financial distress.

Design/methodology/approach

The study applies a random-effects logistic regression model as a baseline analysis using a sample of 110 FTSE 350 manufacturing companies from 2014 to 2019. This technique is supported by conducting a two-stage Heckman regression model to overcome the potential existence of endogeneity problems.

Findings

The empirical evidence suggests that board composition and ownership structure are heterogeneously associated with financial distress probabilities in that they might have either reduced or increased the financial distress of the sampled firms. Specifically, board independence, board gender diversity, audit committee independence and institutional ownership negatively influence the likelihood of financial distress. In contrast, and consistent with the expectations, ownership concentration is positively attributed to financial distress, while the board size, audit committee size and managerial ownership have insignificant impacts on financial distress.

Originality/value

The study extends the existing body of knowledge by examining the collective effect of board characteristics and ownership structures on firms’ financial distress likelihood among a sample of manufacturing firms within the FTSE 350 index post the 2008 global financial crisis and following the recent CG reforms in the UK during the study period from 2014 to 2019.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

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