Factors Associated with Insolvency amongst Small Firms

Abstract

GRAHAM HALL AND BARBARA YOUNG lecturer at Manchester Business School, Manchester University, England. This study represetns at attempt to add to the state of knowledge on why failure takes palce among small firms by drawing on the information contained in the reports of the offical receiver, all on cases of compulsory liquidation. The author say it is unlikely that the characteristics of the companies sufering compulsory liquidation will difer markedly from those experencing creditors's voluntary liquidation. the study's three samples, each of 100 reports at five year intervals, were drawn from involunatary liquidations in the London area. The authors conclude that governemnt initiatives to provide subsidised consultancy in marketing and planning should be extended to include adivce on operational management and suggest that closer attention shold be paid by leader to the emphasis which both owner and offical receivers put on under-capitalisation as a cause of failure.

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