The role of equity valuation in corporate crisis: The EFIM case

Introduction: This study investigates how the accounting practices influenced the crisis of the Ente partecipazioni e finanziamenti industrie manifatturiere (EFIM). Aim of the work: This study examines the events that characterised the crisis of the third public body for the management of equity investments, the EFIM, to highlight the role that accounting practices – in particular, the equity stakes – have played in the EFIM crisis, not allowing to identify early symptoms of crisis and reverse the process of deterioration, or to liquidate the Institution with less public and private sacrifice. Methodological approach: This study is based on a critical interpretative methodological approach. Main findings: Accounting practices with specific reference to the accounting rules of corporate participations and the legal form of public-law entities have played a decisive role in the financial distress of the EFIM. Originality: This study expands the knowledge on the role that accounting practices of corporate participations can play in company financial distress, particularly in the EFIM's financial distress.