ABSTRACT
'Corporate failure' fairly obviously encompasses 'bankruptcy', which for a company effectively means a creditors' liquidation or the appointment of a receiver. If there were a means of identifying companies which are likely to collapse, the diagnosis should immediately be reflected in market judgements. In a competitive environment investors, creditors and other interested parties would be expected to search actively for any clue which gives them an inkling of which companies are going to be winners and which losers. Directors and auditors have long had to consider if a company is 'a going concern' when deciding whether or not its accounts represent 'a true and fair view' of its financial affairs. Company directors and auditors have a special interest in being able to identify businesses heading for bankruptcy as they are required to assess and report whether or not a firm is a going concern.
