Determinants of firm failure in Portugal in 2010-2013

Abstract

Firm failure is a cause and effect of economic recessions. Lower market demand can have enormous impact on firms’ businesses. As some cannot rely on their activity to safeguard a source of income, others are constrained by their clients’ inability to pay. Businesses may then collapse, contributing to job destruction, which in turn, can only further depressed economic conditions. Analysing firm failure determinants is therefore crucial. This work project proposes an analysis of financial-performance indicators on Portuguese firms during the 2010-2013 period. Variables analysed include impairment losses, short-term and long-term debt. These variables were analysed over different sub-samples to determine their effects on firm failure probability in specific contexts.