Financially distressed small and medium-sized enterprise's characteristic and discriminant analysis model: Evidence from the Thai market

The failure of a business is an event which can produce substantial losses to all parties – creditors, investors, auditors, financial institutions, stockholders, employees, and customers, and it undoubtedly reflects the economics of the countries concerned. When a business with financial problems is not able to pay its financial obligations, the business may be driven into the situation of becoming a non-performing loan business and, finally, if the problems cannot be solved, the business may become bankrupt and forced to close down. Those business failures inevitably influence all businesses as a whole. Direct and indirect bankruptcy costs are incurred which include the expenses of either liquidating or an attempting to reorganize businesses, accounting fees, legal fees and other professional service costs and the disaster broadens to other businesses and the economics of the countries involved (Warner 1977; Ross, Westerfield et al. 2008).