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Misunderstanding of Corporate Insolvency and Solvency Assessment Methodology – How Did the Logic Run Away?

Author

Listed:
  • Vladan Pavlovic
  • Goranka Knezevic
  • Antonio Andre Cunha Callado

Abstract

The paper shows that there is a need in most of the Balkan countries to change the law governing the insolvency issue by clearly defining insolvency and thereby removing the confusion surrounding it from the legislation. It is also essential to harmonize the legal provisions so that the term insolvency is used consistently throughout the legal text. The paper also shows the need to define solvency properly in textbooks and present the correct methodology to assess solvency. In this way, it can be expected that neither the term (in)solvency nor the (in)solvency indicator(s) will be incorrectly used by scholars from the Balkan region.

Suggested Citation

  • Vladan Pavlovic & Goranka Knezevic & Antonio Andre Cunha Callado, 2023. "Misunderstanding of Corporate Insolvency and Solvency Assessment Methodology – How Did the Logic Run Away?," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 132-144.
    • Handle: RePEc:bas:econst:y:2023:i:6:p:132-144
    as

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    File URL: https://www.iki.bas.bg/Journals/EconomicStudies/2023/2023-6/08_Goranka-Kne%C5%BEevi%C4%87.pdf
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    References listed on IDEAS

    as
    1. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    2. Vladan Pavlovic & Goranka Knezevic & Antonio Andre Cunha Callado, 2022. "Is the Corporate Solvency Conundrum Primarily a Balkan Issue or a Broader European Continental Misunderstanding?," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 72-93.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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