Concepts of Insolvency (CBR project)


Aims and objectives

This project was concerned with the definitions of insolvency used by creditors, insolvency practitioners and the courts in the process of company failure. It analysed flow concepts (failure to meet obligations as they fall due) and stock concepts (do assets exceed liabilities?); and it assessed the methods of measuring assets when the stock concept is involved. The work was motivated by the general question whether the accounting information used in insolvency decisions secures economically efficient exit of companies (neither delaying the exit of inefficient firms nor precipitating the exit of viable ones).


The empirical part of the research had two strands: interviewing participants in the failure process, especially insolvency practitioners, and analysing company accounting data and survival records. Interviews have been held with insolvency practitioners from both the legal and accounting professions, as well as with an auditor over account qualification (which can precipitate failure). Some 70,000 company balance sheets have been reviewed as part of an analysis of balance sheet insolvency. And the survival records of the entire 1948 population of UK listed companies have been analysed.

Project leader

  • Geoff Meeks

Other principal investigator

  • Gay Meeks

Research associate

  • Geoffrey Whittington

Research assistant

  • Bruce Weisse

Project status



Working papers

G Meeks and J G Meeks (2001), ‘Self-fulfilling prophecies of failure: the endogenous balance sheets of distressed companies’, mimeo

G Meeks and G Whittington (2001), ‘Death on the stock exchange: the fate of the 1948 population of UK listed companies’, mimeo

G Meeks and J G Meeks (2001), ‘A Gouldian view of corporate failure in the process of economic natural selection’, mimeo

D Tweedie and G Whittington (2000), ‘The future of accounting for business combinations’, Cambridge Discussion Papers in Accounting and Finance, 45.