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Efthalia Tabouratzi, Christos Lemonakis, Alexandros Garefalakis ORCID logo



The globalization and the global financial crisis provide a new extremely competitive environment for small and medium sized enterprises (SMEs). During the latest years, the increased number of firms’ default has generated the need of understanding the factors of firms’ default, as SMEs in periods of financial crisis suffer from lack of financial resources and expensive bank lending. We use a sample of 3600 Greek manufacturing firms (9 Sectors), covering the time period of 2003-2011 (9 years). We run a panel regression model with correction for fixed effects in both the cross-section and period dimensions using as dependent variable the calculated Z-Score of each firm, and as independent variables several financial ratios, as well as the exporting activity and the use of International Financial Reporting Standards (IFRS Accounting Standards).We find that firms presenting higher performance in terms of ROA and sales and higher leverage levels that enhance their liquidity as well are healthier in terms of Z-score than their less profitable counterparts and acquire lower rates of probability of default: in other words, less risk. The results of the study can lead to policy implications for both Managers and the Government in order to enhance the growth of Greek manufacturing sector.

Keywords: Default, Survival, SMES, Manufacturing, Greece, Z-Score, Risk

Date received: 15 December 2016

Date accepted: 18 January 2017

How to cite this paper: Tabouratzi, E., Lemonakis, C., & Garefalakis, A. (2017). Determinants of failure in Greek manufacturing SMEs. Corporate
Ownership & Control, 14(3),