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Determinants and consequences of financial distress: review of the empirical literature
Author(s) -
Habib Ahsan,
Costa Mabel D',
Huang Hedy Jiaying,
Bhuiyan Md. Borhan Uddin,
Sun Li
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12400
Subject(s) - corporate governance , financial distress , audit , distress , accounting , economics , business , finance , financial system , psychology , psychotherapist
We synthesise the empirical literature on the determinants and consequences of financial distress, critique the findings and offer suggestions for future research. We categorise these indicators into (i) firm‐level fundamental determinants, (ii) macroeconomic determinants and (iii) firm‐level corporate governance determinants. We categorise the consequences into (i) financial reporting and auditing consequences, (ii) firm‐level operational consequences, (iii) capital market consequences and (iv) corporate governance consequences. We suggest that future research can make a more meaningful contribution, by developing more comprehensive models of predicting financial distress which will entail a departure from the current partial analysis to a more holistic complex analysis.