A COMPARATIVE ANALYSIS OF INTERNATIONAL CORPORATE FAILURES TO ZAMBIA IN RELATION TO CORPORATE GOVERNANCE

Why Corporations fail

Abstract

Corporate failure happens everywhere in the world, in every country, there are some enterprises failing while other excel.

Corporate failure refers to companies’ operations following its inability to make profit or bring in enough revenue to cover its expenses. This can occur as a result of poor management skills, inability to compete or even insufficient marketing.

A key part of performance management is being able to detect signs of corporate distress / failure and be able to take corrective action before it is too late. This page looks at the topic of corporate failure and how to detect it.

It is generally accepted that the key factors making the difference between companies that fail and the ones that survive are profitability, return of equity, gearing or debt levels, cash flow and volatility in business revenue. All companies face risk in their everyday operations. The risk would be higher if a company operates in a volatile clime where there are policy inconsistencies, high inflation rate, unfavourable interest rate and other external risks factors that can negatively affect its corporate existence which could also lead to financial distress if not properly managed.