Corporate turnaround and financial distress
Abstract
Purpose
Drawing on variables cited in the turnaround literature, this study aims to explore whether information contained within annual reports is useful in distinguishing between distressed companies that enact a turnaround and those that fail.
Design/methodology/approach
This study develops a discriminant model to identify distressed companies that have turnaround potential.
Findings
Analysis of the results reveals that successful turnarounds are associated with the severity of the distressed state, its determinants, with the extent of change in the distressed state since the previous year, and firm size.
Originality/value
This article is of use in identifying what information is useful in annual reports.
Keywords
Citation
Smith, M. and Graves, C. (2005), "Corporate turnaround and financial distress", Managerial Auditing Journal, Vol. 20 No. 3, pp. 304-320. https://doi.org/10.1108/02686900510585627
Publisher
:Emerald Group Publishing Limited
Copyright © 2005, Emerald Group Publishing Limited