There are increased calls for corporations to act responsibly. Those responsibilities exceed the classical assumption that the only responsibility of the firm is its shareholders and ultimately to maximize their wealth. Any social issue participation has been described as charity or squandering of resources at the expense of the shareholders. According to the Stakeholder theory, firms should consider every stakeholder that is affected by the company and stakeholder management can be a source of value. The risk reduction hypothesis is especially interesting in the context of corporate sustainability. There have been multiple studies that have explored the relationship between corporate sustainability performance and the risk of financial distress. Like those studies, this study found that corporate sustainability performance is negatively associated with the risk of financial distress. Thereby answering the research question proposed by the authors: “Does corporate sustainability performance affect the risk of financial distress?”. Companies with higher sustainability performance will experience less risk and engagement in those activities works as a risk reduction tool. Different levels of sustainability performance have different effect on the risk, which should be considered by investors and management. It should inspire investors to incorporate sustainable companies in their investment portfolios. Furthermore, the thesis contributes to the field of knowledge by analyzing the empirical results using the Stakeholder Theory, the Shareholder Theory, the Legitimacy Theory, the Resource-based view, the Agency Theory and the Stewardship Theory. The study provides evidence of an increasing importance of sustainability performance and suggests that firms can use sustainability performance to mitigate risk. This is a panel data analysis including approximately 16,000 firm-year observations. The study takes a deductive approach, and the research is conducted under a positivist paradigm. The data is tested through conducting OLS regressions with fixed effects. The results of the statistical testing have been compared to previous studies and other relevant literature.

A causa delle conseguenze che il fenomeno comporta, sia sul piano finanziario sia sul fronte dell'economia reale, l'analisi e la previsione delle insolvenze societarie continua a rappresentare un argomento attuale nell'ambito della ricerca economica. I recenti sforzi condotti dal Comitato di Basilea verso la diffusione di criteri di valutazione del rischio di credito più precisi ed oggettivi, hanno ulteriormente accresciuto l'importanza della materia. L'obiettivo del presente studio è l'analisi del fenomeno del fallimento sul territorio italiano, al fine di valutare quali variabili sono più efficaci nell'individuazione di una situazione di dissesto dell'impresa. Per l'analisi si sono sviluppati dei modelli di previsione delle insolvenze in grado di individuare i segnali early warning di dissesto finanziario. L'analisi econometrica è basata su un campione ampio ed originale di fallimenti rilevati negli anni 2003 e 2004: a tal fine sono stati costituiti dei campioni comparabili di imprese fallite e non fallite ed è stato verificato, mediante l'applicazione di una metodologia logit, il potere previsivo di diversi indici di bilancio e di variabili di tipo non finanziario. I risultati ottenuti sono stati validati su un campione hold-out. L'analisi si evidenzia l'importanza delle caratteristiche del settore di attività nel determinare la forma del processo di fallimento: i modelli sector specific ottengono risultati migliori rispetto ai modelli generali stimati. Inoltre, alcuni fattori comuni ai diversi settori di attività si dimostrano particolarmente efficaci nella previsione dei dissesti aziendali: l'età, il livello di leverage e la composizione del debito d'impresa, così come la sua redditività. / Due to the consequences that the phenomenon entails both on the financial and real sides of the economy, the analysis and prediction of corporate failures continue to be a current topic in economic research. The recent efforts laid by the Basel Committee towards the diffusion of more precise and objective ways of assessing credit risk have further increased the importance of this matter. The purpose of the study is to analyse the bankruptcy phenomenon among Italian firms, in order to assess what firm-specific and industry variables are more important in determining corporate failure events. We develop a bankruptcy prediction model that aims at detecting early signals of financial distress. The econometric analysis is based on a wide and unique sample of recent failure events: comparable sets of bankrupt and non-bankrupt firms are identified and several prior balance-sheet and economic indicators are tested for their power in predicting failure probabilities in a logit modelling framework; model performances are cross-validated on hold-out samples. The analyses provide evidence of the importance of industry membership in determining and shaping corporate failure processes: sector-specific models produce a better assessment of financial distress than general ones. Also, some common factors emerge as important predictors of corporate collapse across different industries: age, gearing and the composition of a firm's debt, as well as its capability of generating profits.