Financial Distress and Insolvency Timing

Abstract

A comprehensive exploration of financial distress requires its classification within the larger context of corporate crisis. According to Krystek (1987), a corporate crisis is an unplanned as well as unintended process of limited duration and controllability which can lead to ambivalent outcomes. It presents a substantial and sustained threat to the company's status as a going-concern or even renders it impossible. This is due to adverse effects on dominant goals of the company, whose threatening or non-achievement put the company's existence as an independent entity in the market with its original goals at risk.