The Non-submission of Accounts and Small Company Financial Failure Prediction

Information concerning past delays in submitting financial statements to Companies House has been found to be an important variable in predicting small company financial failure. However, a distinctive feature of the small company reporting environment is that a large proportion of small companies approaching financial failure fail to submit any accounts in the year(s) immediately prior to failure. This paper presents evidence suggesting that non-submission information can usefully be incorporated into a failure prediction model along with information concerning finite delays in reporting and conventional financial ratios.