Predicting Failure of Swedish and Danish Business Reorganizations

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Predicting Failure of Swedish and Danish Business Reorganizations

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Title: Predicting Failure of Swedish and Danish Business Reorganizations
Author: Bruzelius, Johan
Abstract: This thesis objective is to find variables effective in predicting failure of businesses re- organized according to the Swedish and Danish Reorganization Acts. The reorganization acts came into force in order to save viable but financially distressed firms from liquidation. The sample consists of 333 Swedish and 152 Danish limited companies approved by courts to commence reorganization in 2011 and 2012. The firms are in general small, 48% of the Swedish firms and 64 % of the Danish firms are micro firms employing less than ten employees. This study is to a large extent based on a study made by Laitinen (2013) on Finnish reorganizations. The purpose is to evaluate the importance of pre-filing financial and non-financial information in predicting the outcome (failure or non-failure) of Swedish- and Danish reorganizations. The relationship between pre-filing information and the outcome is assessed by a binary logistic regression. By May 2014, 63 % of the Swedish firms and 71 % of the Danish firms had been liquidated. Models tested in this study are not efficient in predicting the outcome in Swedish reorganizations. However, the financial- and combined financial- and non-financial model is effective and able to explain a fraction of the outcome in Danish reorganizations.
URI: http://hdl.handle.net/10417/5876
Date: 2016-06-07
Pages: 82 s.
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