Corporate Analysts at Work: Size and Industry Effects in Early Failure Prediction

The objective is to show the effect of size and industry on the importance of early warning indicators of financial failure as assessed by Finnish corporate analysts. The findings are based on a questionnaire of the importance of 71 warning indicators with 138 responses from Finnish corporate analysts of four different financial institutions. The findings indicate significant differences in the importance of early warning indicators between target companies of different size (micro, medium-size, and large firms) but less significant differences between companies from different industries (manufacturing, trading, and service firms). Thus, early warning and prediction systems for financial distress should be addressed to different size groups of firms using different indicators. It may however be less necessary to specify these systems for different industries.