Corporate Financial Distress and Recovery: The UK Evidence

Lasfer, Meziane; Remer, Laxmi

doi:10.2139/ssrn.1704411

Cited by 4 publications

(2 citation statements)

References 43 publications

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“…Financial restructuring generally involves negotiating with banks and other creditors, issuing new securities, reducing or eliminating dividends, and converting debt into equity [34]. Reducing or omitting dividends falls under the purview of a business's financial reorganization or restructuring, assuming significant importance in company meetings.…”

Section: Financial Distress and Dividend Distributionmentioning

confidence: 99%

Impact of financial distress on the dividend policy of banks in India: evidence using panel data

Rawal,

Gopalkrishnan

2024

Futur Bus J

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The study primarily aims to examine the impact of financial distress on the dividend distribution policy of banks operating in India. Panel data analysis was performed using a static model to investigate the impact of distress on the bank’s dividend policy. The Z-score developed by Altman measures a bank’s financial distress (a high Z-score indicates the absence of financial distress). Data from 31 out of 34 banks operating in India between 2016 and 2020 has been used. The debt/equity ratio is used as the moderator. The sales log is used as the control variable. A linear connection exists between financial distress and dividends. Furthermore, debt/equity ratio significantly moderates the association of financial distress with dividend policy. The findings contribute to formulating a long-term dividend policy by drawing attention to the distressing situation in the banking sector, focusing on ensuring the banks’ financial viability. Thereby, the findings are novel and hold significant worth in improving the current understanding of the subject.

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Section: Financial Distress and Dividend Distributionmentioning

confidence: 99%

Impact of financial distress on the dividend policy of banks in India: evidence using panel data

Rawal,

Gopalkrishnan

2024

Futur Bus J

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“…Financial restructuring frequently entails negotiating with banks and other creditors, issuing new securities, cutting back on dividends, and switching debt for equity (Lasfer and Remer 2010). Dividend reduction or omission decisions are under the scope of financial restructuring for a firm; as a result, they naturally take on a significant amount of importance in company meetings.…”

Section: Financial Distress and Dividend Distributionmentioning

confidence: 99%

Impact of Financial Distress on the Dividend Policy of Banks in India

Sidhu

Jain

Singh

et al. 2023

JRFM

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The present study primarily examines the impact of financial distress (FD) on the dividend policy of 33 banks working in the Indian economy from 2010 to 2019. In addition, we further explore the association between financial distress and dividend policy under the influence of shareholder activism (SHA). Using the static panel data regression technique, it is revealed that financial distress is non-linearly associated with the dividend policy of banks in an inverted U-shape. In the initial phase of a distressing situation, banks tend to have a liberal dividend policy. However, after reaching the pressure point, the banks start to squeeze dividend distribution to the stakeholders. Furthermore, the significant impact of shareholder activism has been found in the association between financial distress and the dividend payout policy of banks. From the policy perspective, the study will provide the policymakers with a clear all-round perspective of distressing situations, as the current research involves exploring the impact of distress on the dividend policy that will help the experts in basically understanding the adverse effect of financial distress and the repercussions, respectively, on the earning of the shareholders.

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Corporate governance during financial distress – an empirical analysis

Parkinson

2016

IJLMA

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Purpose The traditional form of legal research with its predominant emphasis on doctrinal and theoretical analysis is now increasingly augmented by empirical research that seeks to document actions and decisions and draw broader conclusions. This relatively new research tradition is arguably making a positive contribution to legal theory and practice, particularly in the USA [for a general discussion see SJ Lubben, “Do Empricial Bankruptcy Studies Matter?” (2012) 20 ABI L Rev 715]. The paper aims to report on the use of empirical research to examine corporate governance in the context of financially distressed UK public companies. Design/methodology/approach The paper uses statutory corporate filings and mandatory stock exchange reports to document the process of informal debt resolution prior to the company’s entry into administration or Company Voluntary Arrangement. The findings are presented in an innovative way as a series of case studies focusing on process, participants and outcomes of informal debt resolution. Findings The paper concludes that it is possible to use case study research as a means to explore corporate governance in the context of financially distressed companies. Although such an approach is challenging in various ways, there are some advantages that complement more traditional research approaches. The findings show how directors’ attention shifts away from shareholders’ interests to those of creditors at times of financial distress and challenges conventional models of governance that stress shareholder value. Originality/value The distinctive features of the research are the development of a case-study based approach that draws on publicly available data sources, a process based analysis and a synthesis of corporate governance and law.

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Corporate Financial Distress and Recovery: The UK Evidence

Cited by 4 publications

References 43 publications

Impact of financial distress on the dividend policy of banks in India: evidence using panel data

Impact of financial distress on the dividend policy of banks in India: evidence using panel data

Impact of Financial Distress on the Dividend Policy of Banks in India

Corporate governance during financial distress – an empirical analysis

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