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What Causes Insolvency? A Study Regarding Big And Medium Romanian Enterprises Going Bankrupt In 2013


  • Tudor Andrei RADULESCU

    () (Alexandru Ioan Cuza University of Iasi, Romania)

  • Carmen NISTOR

    () (Alexandru Ioan Cuza University of Iasi, Romania)


The failure of a company, whether insolvency or bankruptcy, has been a topic featured by countless researchers from various fields over time. In an attempt to counteract this negative phenomenon most of the studies focused on developing bankruptcy prediction models, omitting the actual reasons that caused the insolvency. In the present article we will try to determine the main reasons causing insolvency among the largest companies in Romania in 2013. In this purpose, we made a Top 10 Romanian companies which became insolvent in 2013 taking into consideration the report published by Euler Hermes in 2014 “Economic Outlook. Insolvency World Cup 2014: Who will score fewer insolvencies?”. Subsequently, we examine “The Report on the causes and circumstances that led to the insolvency of the debtor" for each individual company from the proposed top. After analyzing the reports for all ten companies studied we found that an increasing of indebtedness and debt collection period, with disinvestment and poor management were the main causes that led to the insolvency in 2013 of the Romanian companies studied.

Suggested Citation

  • Tudor Andrei RADULESCU & Carmen NISTOR, 2014. "What Causes Insolvency? A Study Regarding Big And Medium Romanian Enterprises Going Bankrupt In 2013," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 6(4), pages 114-121, December.
  • Handle: RePEc:jes:wpaper:y:2014:v:6:i:4:p:114-121

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    References listed on IDEAS

    1. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    2. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    3. 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.
    4. H. Ooghe & S. De Prijcker, 2006. "Failure process and causes of company bankruptcy: a typology," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/388, Ghent University, Faculty of Economics and Business Administration.
    5. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. repec:bla:joares:v:4:y:1966:i::p:71-111 is not listed on IDEAS
    7. Peter Back, 2005. "Explaining financial difficulties based on previous payment behavior, management background variables and financial ratios," European Accounting Review, Taylor & Francis Journals, vol. 14(4), pages 839-868.
    8. Daniel W. Greening, 1996. "Do Managers and Strategies Matter? A Study In Crisis," Journal of Management Studies, Wiley Blackwell, vol. 33(1), pages 25-51, January.
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    More about this item


    insolvency; determinants of bankruptcy; Romania;

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation


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