This paper investigates the factors determining the forced closures of firms, which occur when entrepreneurs fail to submit annual reports for their businesses. Drawing on various theoretical perspectives, including a novel focus on the past reporting misconducts of the same entrepreneurs, the study sheds light on this phenomenon. Analysis of Estonian micro-firms run by serial entrepreneurs reveals that recent reporting misconducts, particularly those of a severe nature, significantly determine a firm's forced closure. Additionally, factors such as firm size, age, and certain aspects of corporate governance play significant roles in this regard. In turn, the financial performance of a firm largely fails to signal future forced closure, potentially indicating that when entrepreneurs submit annual re-ports showing normal performance, they might be hiding bad performance. The paper also delineates different types of violators based on the severity of their past misconducts, noting that a particular type characterized by a large number of severe violations is especially prone to forced closures. Finally, the paper develops high-accuracy prediction models for forced closures, identifying the number of most severe violations and firm size as the most important variables.
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