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Francesco Ciampi



Authors and WSEAS

Francesco Ciampi


WSEAS Transactions on Business and Economics


Print ISSN: 1109-9526
E-ISSN: 2224-2899

Volume 14, 2017

Notice: As of 2014 and for the forthcoming years, the publication frequency/periodicity of WSEAS Journals is adapted to the 'continuously updated' model. What this means is that instead of being separated into issues, new papers will be added on a continuous basis, allowing a more regular flow and shorter publication times. The papers will appear in reverse order, therefore the most recent one will be on top.

Volume 14, 2017


The Potential of Top Management Characteristics for Small Enterprise Default Prediction Modelling

AUTHORS: Francesco Ciampi

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ABSTRACT: The aim of this study is to verify the potential of top management characteristics for small enterprise (SE) default prediction modelling. Logistic regression was applied to a sample of 423 Italian SEs, as defined in the Base Capital Accords (firms with a turnover below 5 million Euro) in order to develop a SE default prediction model based on both financial ratios and SE top management characteristics. The predictive power of this model was then compared to that of a second model whose predictive variables were exclusively represented by balance sheet financial ratios. The main findings are: i) managerial characteristics significantly improve the SE default prediction accuracy rates; ii) the smaller is a firm the higher is the increase in prediction accuracy that can be obtained by using managerial characteristics as default predictors; iii) SEs belonging to different size groups need to be treated with different prediction models; iv) SE management’s over-confidence in its ability to control the outcome of all events, especially external events, reduces a firm’s capacity to survive.

KEYWORDS: Bankruptcy, Credit rating, Default prediction modelling, Financial ratios, Managerial characteristics, Small enterprise, Top management

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WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 14, 2017, Art. #41, pp. 397-408


Copyright © 2017 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution License 4.0