The influence of corporate governance variables in financial distress models for SMEs: Evidence from the Family Business field

1 INTRODUCTION The upcoming work of thesis focuses on the construction of financial distress prediction models to predict enterprises’ default statuses and their symptoms, with a particular eye pointed on small and medium enterprises and the Italian territory, whose entrepreneurial panorama is mostly composed of SMEs. The need of a predictive model, in this sense, was developed starting from the well- known “economical boom” in the early 60s, historical period characterized by a major demand rather than offer, but also a frequent request of credit capitals by SMEs that lead them to a higher enterprises mortality index due to an overcoming debts situation than usual. This scenario issued the birth of the “Code of Insolvency and Crisis” in 2007, which required a more frequent control of all the ratios selected in order to promptly identify an eventual warning status of default of the firm. The following chapters are aimed to the presentation of financial distress prediction models, by including the lack of a proper definition of the model and the hypothetical types of models that could be used, the variables considered to conduct the analysis, especially focused on a corporate governance basis, and a study case opportunely selected to demonstrate the goal of this work of thesis: the increase of FDPMs’ accuracy for SMEs by introducing both financial ratios and corporate governance variables into the statistical analysis conducted. In particular, the first two chapters will include an appropriate paragraph dedicated to the main two leitmotivs of this work of thesis: the evidence from the Family Business field and the one from the Italian territory. Nevertheless, while the Italian analysis finds expression in the case study considered to prove the aim of the thesis, the FB field is more of a suggestion to make for further researches and studies to be done by scholars. As regards the final chapter, it proposes a study case based on real statistical data on Italian enterprises, elaborated by professor Francesco Ciampi in his article "Corporate