DETERMINANTS OF CORPORATE FAILURE: A WAY OF ENSURING A COUNTRY’S SUSTAINABLE DEVELOPMENT.

Abstract

This study examines the relationship between Corporate Failure (CF) and Account Receivables (AR), Corporate Debt (DR) and Corporate Sales Growth (SG) in Nigeria. This study is a cross sectional study conducted on the corporate failures in Nigeria, using the Altman’s Z approach over some periods of time, lasting for fourteen years in order to establish sequence of data with fifteen observations. The study spans over a period between 2002 to 2016 covering all delisted manufacturing companies on Nigeria stock Exchange in that period. The study made use of ordinary least square statistical method to test the relationship between CF, AR, DR and SG. Augmented dickey-fuller statistical tool was employed to test for unit root in order to determine the stationary of time trend in the study. It was found that AR and SG have significant positive relationship with CF while DR has a positive but not significant relationship with CF. It was therefore recommended that apart from controlling ineffective working capital management that could lead to illiquidity/overtrading, the management should focus on adequate financial planning and budgetary control, fraud prevention, avoid poor industrial relations which could lead to loss of key management staff and put in place adequate corporate governance.