60 percent of corporate crises are homemade
A joint study by Lucerne University of Applied Sciences and Arts and Kiel University of Applied Sciences shows an increase in severe corporate crises in the DACH region: one in three listed companies has suffered a massive slump in its share price since 2018. Swiss companies are proving to be particularly resilient in a country comparison. The analysis also shows that more than half of all crises are the result of strategic or internal mistakes.
Lucerne University of Applied Sciences and Arts and Kiel University of Applied Sciences systematically analyzed 669 listed DACH companies in the period from 2018 to 2024 for severe share price slumps and their causes. The analysis is based on share price data and over 2,800 publicly available company and analyst reports. The study shows that around one in three companies in Germany, Austria and Switzerland has suffered at least one severe crisis since 2018 - with a massive share price loss of over 25% within one month. Most companies are slow to recover from such a drastic crisis. Even two years after a major loss, affected companies have on average only just returned to their pre-crisis level, while the DACH stock markets as a whole have gained around 15% in the same period. ’This weak recovery shows that many companies are not sufficiently resilient to the crisis. Around a third of companies that have experienced a severe slump get into trouble again later - often due to the same structural weaknesses such as high dependencies on key customers or recurring governance and reporting deficiencies,« says Prof. Dr. habil. Stefan Hunziker, Professor for
Risk management at the HSLU.
Price slumps are mostly homemade
The causes of severe share price collapses often lie within the company itself: Based on the analysis of company announcements, ad hoc statements, analyst reports and relevant media reports, around 41 percent of the crises examined are attributed to strategic missteps, such as risky financing structures with high levels of debt or strong dependencies on individual key customers. A further 19 percent of crises are caused by internal, fundamentally avoidable risks. These include, for example, late or incorrect financial reporting, compliance and governance problems and miscalculated major projects. External shocks - such as geopolitical upheavals, international trade and customs conflicts or macroeconomic turbulence - account for around 40 percent of share price collapses. This shows how important robust decision-making and risk processes are, especially in uncertain times.
Germany particularly crisis-prone, Switzerland more resilient
A country comparison reveals a clear picture: Germany is much more frequently affected by severe price slumps due to its more cyclical and energy-intensive sectors. Swiss companies, on the other hand, benefit from more stable sectors such as healthcare, consumer staples and finance and are considered comparatively resilient in the DACH region. The results clearly show that companies with better risk management are less susceptible to severe crises. «Effective risk management improves the quality of decision-making: it makes risks visible at an early stage and shows which options for action really count. Companies that systematically monitor customer dependencies, financial risk positions or operational weaknesses, for example, are significantly less likely to experience severe turbulence,» says Hunziker.
Source: Lucerne University
