What are, if any, the explanatory financial factors of bankruptcy in Norwegian startups?
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- Master of Science 
In this paper, we investigate startups that have survived the first crucial years, but which then went bankrupt during the following years. The intention behind this focus is to acknowledge why some startups do not cross the chasm. A logistic regression model was designed with several variables to explain bankruptcy. The usage of the Akaike Information Criterion (AIC) was central to narrow down relevant variables alongside significance and z-statistics. Robustness has also been tested for the explanatory variables. In general, one could say that since the solvency ratios were the most dominant explanatory factors, which indicate how Norwegian startups have a negative net worth and a non-manageable debt level. Since Norwegian startups hold less liquid assets, one important issue is the amount of untapped cash within the organization. The industries that experienced bankruptcy the most were (i) water supply; sewerage, waste management, and remediation activities, (ii) construction, (iii) transportation and storage, and (iv) accommodation and food service activities. One thing these industries have in common is the number of tangible assets . As a result, the tangible assets could be more difficult to quickly transform into cash. Interaction effects have not been considered, nor dynamic effects or firm fixed effects. The variables that have been tested have previously been tested on public and listed companies, and not on startups. The findings could be used to greater understand the financial struggles Norwegian startups have. The different actors that could find the findings useful are angel investors, venture capitalists, the authorities, and most important the entrepreneur and the Norwegian startup environment. The concept of bankrupt startups often concerns aspects connected to the entrepreneur and not necessarily underlying financial reasons. Therefore, this master thesis could contribute to filling an important knowledge gap within the research field. Keywords: Startups, financial explanatory factors, Norway, financial ratios, bankruptcy, financial statement analysis, capital structure, AIC, logistic regression.
Masteroppgave(MSc) in Master of Science in Business, Accounting and Business Control - Handelshøyskolen BI, 2020