Managerial Forensics

Chapter 16

Changing Direction

Diana Heeb Bivona

Introduction

For nearly half a century, researchers and practitioners have pondered the question as to how and why businesses fail. As a result, numerous predictive failure models have been created. Why is there such an obsession with creating these models? The belief is that better predictive failure models could be the key to creating early-warning systems for businesses. If businesses are better able to understand the origins of failure, managers could take specific corrective actions to prevent failure and turn a company around.

Researchers have attempted to put forth a predictive model to explain why businesses fail. However, no definitive predictive model has been created that is both highly ...