Over recent years Australia has experienced an increasing number of corporate collapses. The shockwaves of such collapse have significantly affected the economic livelihood of not only shareholders, employees and financiers but also trade creditors and the general"-public at large. Further, the internationalisation of the financial and investment markets has meant that such collapses have caused negative perceptions of Australian companies. Consequently, companies’ ability to access offshore funds and attract international investors has been affected.
The objective of this report is to develop a conceptual process model of corporate collapse that identifies the causes and symptoms which are associated with this phenomenon. A systematic study of the subject was undertaken by means of a literature review. It was established that corporate collapse comprised of the following important elements; causes, symptoms/warning signs and an identifiable failure path. On the basis of research a model was developed to incorporate these findings.
Hopefully, this model will be of benefit to , management through increasing their understanding on this important subject and by providing a diagnostic tool for early prediction of corporate collapse.