Does size matter in predicting SMES failure?

Research output: Contribution to journalArticlepeer-review


External organisations

  • Newcastle University
  • Coventry University


This study acknowledges the diversity between micro, small and medium-sized firms while predicting bankruptcy and financial distress of United States small and medium-sized enterprises. Empirical findings suggest that survival (failure) probability increases (decreases) with increasing firm size and firms in different size categories have varying determinants of bankruptcy, while factors affecting their financial distress are mostly invariant. Magnitude of significant covariates changes across the size categories of both bankrupt and financially distressed firms. Further, operating cash flow information does not add any marginal increment in prediction performance of multivariate hazard models above baseline models developed using information from income statements and balance sheets. This result holds for failure likelihood of SMEs as well as their respective size categories.


Original languageEnglish
Pages (from-to)571–605
Number of pages35
JournalInternational Journal of Finance and Economics
Issue number4
Early online date25 Jul 2018
Publication statusPublished - 11 Oct 2018


  • bankruptcy, SMEs, survival analysis, financial distress, operating cash flow