http://afr.sciedupress.com Accounting and Finance Research Vol. 9, No. 2; 2020 Published by Sciedu Press 35 ISSN 1927-5986 E-ISSN 1927-5994 Factors Affecting Business Failure of Small and Very Small Greek Family Enterprises Nikolaos Arnis 1 , Kostas Karamanis 1 & Georgios Kolias 1 1 University of Ioannina, Department of Accounting & Finance, Preveza, 48100, Greece Correspondence: Nikolaos Arnis, University of Ioannina, Department of Accounting & Finance, Preveza, 48100, Greece. Received: March 1, 2020 Accepted: March 27, 2020 Online Published: March 28, 2020 doi:10.5430/afr.v9n2p35 URL: https://doi.org/10.5430/afr.v9n2p35 Abstract This article investigates the factors that lead small and very small Greek businesses to financial failure using financial and accounting ratios as well as corporate governance characteristics. Our data set consists of 136 small and very small firms that went bankrupt, which were matched with a sample of 472 non bankrupt enterprises formed by random selection based on year, sector and sub-sector determinants, from 2003 to 2014. The total firm-year observations for bankrupt and non bankrupt companies were 940 and 5,041 respectively. Applying a Logit model for panel data, the results showed a significant impact on the likelihood of small and very small firms failing due to factors such as the type and the amount of bank lending, the level of profitability, cash flows, and liquidity.The data also support a statistically significant correlation of the probability of failure with non-financial factors such as Duality on the Board and CEO gender.The results of this paper will be useful for both banks and managers of small and micro businesses. JELClassification: C33, G32, G33 Keywords: financial and accounting ratios, corporate governance, business failure, small and very 1. Introduction Small and very small (micro) enterprises are the majority of businesses and play a key role in the economy of each country, offering jobs, added value and growth opportunities, while the economic and social impact of their financial failure is significant. These reasons have led us to examine the determinants of the failure of these businesses, focusing primarily on corporate governance parameters and also on the impact and characteristics of bank lending. Representing these factors in a relevant model can be easily done with variables derived from published company information. According to Eurostat data, the overwhelming majority of European Union enterprises (Note1) 98.8% consisted of small and micro enterprises in 2015 (excluding financial sector firms), employing 49.3% of all employees, while their added value at European Union level was 37.9%. The financial contribution of small and micro-enterprises is particularly important, especially in the smaller countries of the European Union, providing much of the added value to their respective economies. In recent decades, research into the factors that cause business failure and bankruptcy, on the one hand, and predictability, on the other, have generated a great deal of interest in the global scientific community. Research focusing on the investigation of factors and the prediction of financial failure of small and very small enterprises is limited, e.g. Edmister (1972); Argenti (1976); Keasey and Watson (1987); Laitinen (1991); Altman & Sabato (2007); Rikkers & Thibeault (2009); Ciampi (2015); Nur Adiana Hiau Abdullah et al. (2016); Muhammad M. Ma'aji (2019), if compared to their counterparts focusing on large companies and listed companies. Important studies that have been published in the past, such as Beaver (1966), Altman (1968), Meyer & Pifer (1970), Ohlson (1980), Zmijewski (1984), Frydman, Altman and Kao (1985), Altman & Sabato (2007), Hartzell & Peck (1995), Kahya & Theodossioy (1999), Charitou et al. (2004), Agarwal & Taffler (2008), Richardson et al. (2015), refer to samples which include large enterprises, listed or not on the stock market, or to samples that include a set of small and large businesses without differentiation. An important element in investigating the factors that drive small and