The Behaviour of Cooperative Societies in Business Insolvency Processes

Factors that lead a company to business failure can be originated by economic or financial issues. However, despite of the high volume of studies, especially during the economic crisis, a theory explaining business failure, or... [ view full abstract ]

Factors that lead a company to business failure can be originated by economic or financial issues. However, despite of the high volume of studies, especially during the economic crisis, a theory explaining business failure, or the reasons that may cause it, has not been formulated. In this sense, it is very important delimiting the concept of business insolvency. Most of these studies have focused on large-scale capitalist societies, without considering the problem of other legal forms, such as cooperative societies.
This work general purpose is to test whether a corporate insolvency prediction model, based on a set of economic, financial and structural variables, which have been used in studies focusing on large enterprises, is applicable to small businesses. The predictive capacity of the model on the possible business failure is analyzed, being the solvency and the liquidity the main variables that anticipate this situation. The possible moderating effect of the legal form in both variables, taking into account the particularities of cooperative societies is also analyzed.