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Predicting Firm Failure: A Behavioral Finance Perspective

Author

Listed:
  • Rassoul Yazdipour

    (California State University, Fresno)

  • Richard Constand

    (University of West Florida)

Abstract

In this article we first argue that researchers in the area of financial distress and failure cannot ignore the human/managerial/decision-making side of the business and just focus on the business' operations side; as has been the case so far for almost all the research in the area. We then discuss how psychological phenomena and principles, known as heuristics or mental shortcuts, could be utilized in building more powerful success/failure prediction models especially for small and medium sized enterprises (SMEs).

Suggested Citation

  • Rassoul Yazdipour & Richard Constand, 2010. "Predicting Firm Failure: A Behavioral Finance Perspective," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 14(3), pages 90-104, Fall.
    • Handle: RePEc:pep:journl:v:14:y:2010:i:3:p:90-104
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    References listed on IDEAS

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    Cited by:

    1. Linda Bergset, 2015. "The Rationality and Irrationality of Financing Green Start-Ups," Administrative Sciences, MDPI, vol. 5(4), pages 1-26, November.

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    More about this item

    Keywords

    Bankruptcy; Firm Failure; Behavioral Finance; Behavioral Economics; Distress;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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