Taxonomy of six explanatory reorganization interruption patterns: Empirical evidence from the Finnish firms June 2008 - May 2009

Abstract

The purpose of the study is to examine whether there are differences among the firms which have interrupted their reorganization proceedings under the Finnish reorganization proceeding. More precisely, the present study investigates whether the firms behave differently in terms of financial ratios and other non-financial factors before and during the reorganization proceeding. The study contributes to previous literature by concentrating solely on interrupted reorganization proceedings. The differences among the interrupted proceedings are important to study in order to prevent later interruptions and to improve the efficiency of the proceedings.

The data consists of a sample of Finnish firms (n=76) that have been forced to interrupt their reorganization proceeding during the period 1.6.2008-31.5.2009. The final sample consists of 60 firms. The data includes pre-filing financial statements and documents in Finnish courts concerning the reorganization.

The results are drawn from a cluster analysis. The results indicate that there can be found statistically significantly different groups among interrupted reorganization proceedings in terms of financial ratios (profitability, solvency and liquidity). In addition, it can be observed that the distinguished groups have differences in non-financial characteristics, but solely few characteristics were statistically significantly different between the groups. This can be a consequence of a small sample (n=60). This study is a part of the project “Solvency and strategic management of the firm” (in Finnish: “Yrityksen maksukyky ja strateginen johtaminen”) financed by Tekes (The Finnish Funding Agency for Technology and Innovation) and a group of partners (Project Nr. 40101/08).