Business Failure Analysis: An Events Approach

An events approach to investigating business failure is presented in this study. The study identifies events in the bankruptcy process that characterize restaurant companies that have filed for bankruptcy under Chapter 11. Based on a sample of 12 matched bankrupt and non-bankrupt companies, events that were unique to the bankrupt companies were: net losses, management turnover, loan default, credit accommodation, royalty default, decline in unit sales, and renegotiation of franchise contract.