Early warning systems for financial distress: International developments
DOI:
https://doi.org/10.17524/repec.v20.e3795Palavras-chave:
Early warning systems. Financial Distress. Regulatory Practice.Resumo
Abstract
Objective. This editorial examines the evolution and effects of mandatory early warning systems for financial distress, focusing on the European Directive (EU) 2019/1023 and its Italian transposition (Legislative Decree No. 14/2019). It seeks to understand how this preventive model reshapes corporate governance, expanding managerial responsibility and promoting practices for the early detection of financial imbalances.
Method. The study adopts a qualitative and comparative approach, analyzing the conceptual and operational foundations of the European regulatory framework and contrasting them with the Brazilian legal environment, where preventive mechanisms remain voluntary. The discussion integrates regulatory references, academic literature, and international practices in governance and risk management.
Results. The analysis shows that mandatory early warning systems strengthen organizational resilience, structure internal processes for continuous monitoring, and reduce the likelihood of insolvency, particularly for small and medium-sized enterprises (SMEs). In Brazil, the absence of mandatory requirements maintains a reactive system, limiting organizations’ preventive capabilities.
Contributions. The editorial broadens the debate on governance-based crisis prevention, offering practical implications for SMEs and for accounting and consulting professionals, as well as identifying research avenues related to organizational culture, financial performance, and the effects of voluntary adoption of such systems.
Traduções deste artigo
Referências
Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The Journal of Finance, 23(4), 589–609.
Beaver, W. H. (1966). Financial ratios as predictors of failure. Journal of Accounting Research, 4(Supplement), 71–111.
Davis, E. P., & Karim, D. (2008). Comparing early warning systems for banking crises. Journal of Financial Stability, 4, 89–120. https://doi.org/10.1016/J.JFS.2007.12.004
Elsubbaugh, S., Fildes, R., & Rose, M. B. (2004). Preparation for crisis management: A proposed model and empirical evidence. Journal of Contingencies and Crisis Management, 12(3), 112–127. https://doi.org/10.1111/j.0966-0879.2004.00441.x
Evans, N., & Elphick, S. (2005). Models of crisis management: An evaluation of their value for strategic planning in the international travel industry. International Journal of Tourism Research, 7(3), 135–150. https://doi.org/10.1002/jtr.527
Ghaderi, Z., King, B., & Hall, C. M. (2021). Crisis preparedness of hospitality managers: Evidence from Malaysia. Journal of Hospitality and Tourism Insights, 5, 292–310. https://doi.org/10.1108/jhti-10-2020-0199
Habib, A., D’Costa, M., Huang, H., Bhuiyan, M. B. U., & Sun, L. (2020). Determinants and consequences of financial distress: Review of the empirical literature. Accounting and Finance, 60(S1), 1–45.
Jin, Y., Coombs, W. T., Wang, Y., van der Meer, T. G. L. A., & Shivers, B. N. (2024). “READINESS”: A keystone concept beyond organizational crisis preparedness and resilience. Journal of Contingencies and Crisis Management, 32, e12546.
Liu, S. (2018). Defending against business crises with the help of intelligent agent–based early warning solutions. Proceedings of the Seventh International Conference on Enterprise Information Systems, 2, 58–65. https://doi.org/10.5220/0002543600580065
Mitroff, I. I., & Alpaslan, C. M. (2003). Preparing for evil. Harvard Business Review, 81(124), 5–11.
Ohlson, J. A. (1980). Financial ratios and the probabilistic prediction of bankruptcy. Journal of Accounting Research, 18(1), 109–131.
Vašíčková, V. (2020). Crisis management process: A literature review and a conceptual integration. Acta Oeconomica Pragensia, 27(3–4), 61–77. https://doi.org/10.18267/j.aop.628
Wang, Y. (2022). Financial crisis prediction model of listed companies based on statistics and AI. Scientific Programming. https://doi.org/10.1155/2022/1118023
Zhang, Z., Liu, X., & Niu, H. (2023). Financial crisis early warning of Chinese listed companies based on MD&A text-linguistic feature indicators. PLOS ONE. https://doi.org/10.1371/journal.pone.0291818
Zmijewski, M. E. (1984). Methodological issues related to the estimation of financial distress prediction models. Journal of Accounting Research, 22(Supplement), 59–82.
Downloads
Publicado
Como Citar
Edição
Seção
Licença
Copyright (c) 2026 Marco Fasan, Francesco Scarpa, Eduardo Flores
Este trabalho está licenciado sob uma licença Creative Commons Attribution 4.0 International License.
