A review of the limitations of financial failure prediction research

  1. Laitinen, Erkki K.
  2. Camacho-Miñano, María-del-Mar 1
  3. Muñoz-Izquierdo, Nora
  1. 1 Universidad Complutense de Madrid
    info

    Universidad Complutense de Madrid

    Madrid, España

    ROR 02p0gd045

Zeitschrift:
Revista de Contabilidad

ISSN: 1988-4672 1138-4891

Datum der Publikation: 2023

Ausgabe: 26

Nummer: 2

Seiten: 255-273

Art: Artikel

DOI: 10.6018/RCSAR.453041 GOOGLE SCHOLAR lock_openOpen Access editor

Andere Publikationen in: Revista de Contabilidad

Zusammenfassung

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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