What is Insolvency

In today's rapidly globalizing and digitalizing world, many factors may cause businesses to fail. Financial crises and corporate scandals experienced in the developed financial markets have resulted in the bankruptcies of many companies like Lehman Brothers, Enron, Parmalat, Wirecard, etc. Financial failure can be defined as the business's inability to meet its obligations to lenders. When financial failure is unmanageable, some companies may become bankrupt. The purpose of this study is to figure out the causes of business failure. The factors that may lead to business failure have been separately revealed in this context. Mismanagement is one of the main reasons for financial failure. A company can also fail if it cannot generate more returns than its fixed costs. In addition, the wrong merger and acquisition decision of a firm that has reached a certain maturity may be the reason for failure. Failure to comply with corporate governance principles, which aim to increase the efficiency of businesses, is also a probable reason for failure.