Does ESG Predict Business Failure in Brazil? An Application of Machine Learning Techniques
The aim of this study is to explore the influence of environmental, social, and governance (ESG) factors on business failure in Brazil by employing advanced machine learning techniques. We collected data from 235 companies and conducted principal component analysis (PCA) on 40 variables already used in the bankruptcy failure literature, resulting in the formation of seven variables that predict business failure. The results indicate that ESG factors significantly predict business failure in Brazil. This study has implications for investors, policymakers, and business leaders, offering a more precise tool for risk assessment and strategic decision-making.
Authors
- Luíz Pinto Machado (ORCID: https://orcid.org/0000-0001-6209-969X)
- António Almeida (ORCID: https://orcid.org/0000-0002-3216-2018)
- Sumaira Ashraf (ORCID: https://orcid.org/0000-0002-2295-7263)
- Hassan Raza (ORCID: https://orcid.org/0000-0002-9394-4961)
- Mehwish Kaleem
Institutions
- University of Lisbon (PT)
- University of Évora (PT)
- Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology (PK)
- Atlântica Instituto Universitário (PT)
- Sultan Zainal Abidin University (MY)
- Universidade da Madeira (PT)
- University of Gujrat (PK)
Publication Details
- Journal
- Risks
- Published
- 2024-11-25
- DOI
- https://doi.org/10.3390/risks12120185
- Citations
- 2
- Primary Topic
- Financial Distress and Bankruptcy Prediction
- Type
- article
- Field-Weighted Citation Impact
- 1.89
Funders
- Fundação para a Ciência e a Tecnologia