Bankruptcy factors at different stages of the lifecycle for Russian companies

Electronic Journal of Applied Statistical Analysis. 2022. Vol. 15. No. 1. P. 187–210.

Zelenkov Y., Fedorova E.

Many aspects of bankruptcy have not yet been thoroughly studied, among such issues are the causes that lead to bankruptcy at various stages of the company’s lifecycle. We hypothesize that the most significant factors in- fluencing the probability of company bankruptcy at a particular stage of its lifecycle are those the effectiveness of which is at the lowest level at this stage. These factors include the external environment, the quality of financial, and corporate governance. The methodology of the research consists of the meth- ods PLS-SEM (to determine the impact of factors on bankruptcy) and DEA (to evaluate the effectiveness of factors usage). The empirical database in- cludes 376 Russian public companies. The simulation results support the hypothesis. We also revealed that the external environment exerts a more powerful effect on the probability of bankruptcy at the stage of growth. The role of financial management increases from the initial stage to the final stage of the life cycle. Corporate governance is less important than the other two factors, but its impact is significant at the stage of growth.

Keywords: corporate governance, bankruptcy prediction, external environment, financial management, company life cycle