Can corporate governance save distressed firms from bankruptcy? An empirical analysis

Fich, Eliezer M.; Slezak, Steve L.

doi:10.1007/s11156-007-0048-5

Cited by 178 publications

(209 citation statements)

References 37 publications

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“…According to agency theory the adequate control of management authority is not possible without the existence of independence of board and to insure the avoidance of possible opportunism and nepotism of management in greater interest of shareholders (Fama & Jensen, 1983;Jensen, 1993;Jensen & Meckling, 1976). The presence of independent directors will also reduce information asymmetries and agency costs between shareholders and management (Chang, 2009;Daily, 1995;Fich & Slezak, 2008).…”

Section: Resultsmentioning

confidence: 99%

An empirical analysis of corporate governance and firm value: Evidence from KSE-100 Index

Khan¹,

Tanveer²,

Malik³

2017

10.5267/j.ac

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This paper investigates the impact of corporate governance on firm value measured by Tobin's Q. Different corporate governance proxies i.e. board size, board independence, audit committee and CEO duality are interacted with firm value. A sample of 91 nonfinancial firms listed on KSE was selected over the period 2010-2014. The findings of the study show that board size and CEO duality had negative impacts on firm value. Moreover, board size, non-executive directors and audit committee had positive and significant impacts on firm value.Growing Science Ltd. All rights reserved. 7

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Section: Resultsmentioning

confidence: 99%

An empirical analysis of corporate governance and firm value: Evidence from KSE-100 Index

Khan¹,

Tanveer²,

Malik³

2017

10.5267/j.ac

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“…Also, some scholars found that the proportion of outside directors was positively associated with successful turnarounds and negatively associated with corporate liquidations (Daily, 1995) and that the turnaround firms were more likely to have a greater outside control of the board (Mueller & Barker III, 1997). Finally, in the years between 2000 and 2008, it was found that significant improvements affected the operating performance for those firms with outside directors, that initiated restructurings (Perry & Shivdasani, 2005) and that the boards with independent directors were more likely to avoid bankruptcy (Elloumi & Gueyiè, 2001;Fich & Slezak, 2008).…”

Section: Discussionmentioning

confidence: 99%

“…Two studies (25%) finds that smaller boards are associated with increased financial performance (Dowell et al 2011;Fich & Slezak, 2008). In contrast, four studies (50%) find that smaller boards are associated with greater probabilities of distress (Gales & Kesner, 1994;Gilson, 1990;Hambrick & D'Aveni, 1992;Mueller & Barker III, 1997).…”

Section: Board Observationsmentioning

confidence: 99%

“…The heterogeneity increases for the nine articles that fall solely in Cluster IV (Betker, 1995;Fich & Slezak, 2008;Greening & Johnson, 1996;Hambrick & D'Aveni, 1988;Lee & Yeh, 2004;Mudambi & Treichel, 2005;Okazaki, Sawada, & Wang, 2007;Sheppard, 1994;Yawson, 2006). No study is comprised solely in Cluster II and the two articles that fall solely in Cluster III (Boone, De Brabander, & Hellemans, 2000;Haveman & Khaire, 2004) use the logit and the survival analysis respectively.…”

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confidence: 99%

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Systematizing the Empirical Research on Corporate Distress. What Board Features Affect Survival?

Abatecola

Farina

Gordini

2013

AMPROC

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Over the years, understanding the possible antecedents of corporate distress has received considerable interest among the scholars and practitioners of management worldwide. Also, much of the evolving empirical research around this topic has been increasingly devoted to studying what board features can increase or decrease the survival of distressed firms.Although still fragmented, the advancements within this kind of research have demonstrated that particular board features count. Thus, this article aims at providing both the management scholars and practitioners with the systematization of these advancements. The findings from the present review show that board independence tends to prevent distress situations and increase the survival of those firms that initiate their restructuring. The board heterogeneity and low tenure can also count. Finally, it is evidenced that the heterogeneity of the statistical methods employed by the extant literature has increased proportionally with the time and journal ranking of the reviewed publications.

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“…Investor trust will have a positive impact on the availability of working capital, while creditor confidence will impact on the decrease of cost of debt (Ashbaugh et.al, 2004;Byun, 2007;Bhojraj & Sengupta, 2003). Furthermore, Elloumi & Gueyie (2001); Supatmi (2007); Huang & Zhao, (2008); Fich & Slezak (2008); Ward & Foster (1997), Yin & Tsui (2004) and Sengupta & Faccio (2011) proved that the probability of financial difficulties of implementing GCG, is lower than companies that do not implement GCG.…”

Section: Introductionmentioning

confidence: 99%

Good Corporate Governance and Predicting Financial Distress Using Logistic and Probit Regression Model

Juniarti

2013

jak

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The study aims to prove whether good corporate governance (GCG) is able to predict the probability of companies experiencing financial difficulties. Financial ratios that traditionally used for predicting bankruptcy remains used in this study. Besides, this study also compares logit and probit regression models, which are widely used in research related accounting bankruptcy prediction. Both models will be compared to determine which model is more superior. The sample in this study is the infrastructure, transportation, utilities & trade, services and hotels companies experiencing financial distress in the period 2008-2011. The results show that GCG and other three variables control i.e DTA, CR and company category do not prove significantly to predict the probability of companies experiencing financial difficulties. NPM, the only variable that proved significantly distinguishing healthy firms and distress. In general, logit and probit models do not result in different conclusions. Both of the models confirm the goodness of fit of models and the results of hypothesis testing. In terms of classification accuracy, logit model proves more accurate predictions than the probit models.

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Can corporate governance save distressed firms from bankruptcy? An empirical analysis

Abstract: Financial distress, Bankruptcy, Corporate governance, G30, G33,

Cited by 178 publications

References 37 publications

An empirical analysis of corporate governance and firm value: Evidence from KSE-100 Index

An empirical analysis of corporate governance and firm value: Evidence from KSE-100 Index

Systematizing the Empirical Research on Corporate Distress. What Board Features Affect Survival?

Good Corporate Governance and Predicting Financial Distress Using Logistic and Probit Regression Model

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