Mortality factors on Small and Medium Companies

Abstract

This work aims to identify the determinants that leads small businesses to death, it means, bankruptcy business. For this purpose we used two databases: one where collected data from active business (SABI), and another containing data of bankrupt business (COFACE - Services).
Several models were estimated and it was used various statistical techniques, choosing the one that presented best validation results for the sample considered to be interpreted in order to identify the determinants of mortality said. We analyzed a general model and three sector models, and it was concluded that the models by sectors can achieve best results, however, when these are not available, the general model is able to provide good results.
As in previous studies on the subject, it was found that the model has a better perform when ranks business a year earlier from bankruptcy than in longer periods. In this case the situation was analyzed one and three years before bankruptcy happens. The main variables considered the determinants of mortality were the level of debt and performance management’s performance.