Governance Patterns in Bankruptcy Reorganizations

DAILY, CATHERINE M.

doi:10.1002/(sici)1097-0266(199605)17:5<355::aid-smj813>3.0.co;2-s

Cited by 105 publications

(24 citation statements)

References 37 publications

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“…A subset of these studies examine the influence of institutional ownership on the performance of established corporations (Daily, 1996;. These studies are commonly grounded in agency theory (Dalton et al, 2007), which posits that high levels of institutional investment discipline managers to act in the interests of shareholders rather than in their own (Jensen & Meckling, 1976).…”

Section: Introductionmentioning

confidence: 99%

Institutional Investor Portfolio Stability and Post-IPO Firm Survival: A Contingency Approach

Reutzel¹

2012

IJBM

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This study examines the influence of institutional investor portfolio stability on the survival of 379 IPO firms that went public in 1997. I find a negative relationship between the amount of stable institutional investment in and newly public firms and post-IPO firm failure. Consistent with multiple agency theory I also find that outside director board control weakens the influence of stable institutional investment on post-IPO firm failure. These results provide support for multiple agency theory and highlight the importance of differences among and between principals and agents in the post-IPO setting.

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Section: Introductionmentioning

confidence: 99%

Institutional Investor Portfolio Stability and Post-IPO Firm Survival: A Contingency Approach

Reutzel¹

2012

IJBM

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“…As a result, the level of RMC human capital may influence a firms' bankruptcy (Ng, Chong and Ismail, 2012). Resource dependence theory suggests that the resources obtained by board members may influence a firm's likelihood of bankruptcy (Daily, 1996;Hillman, Withers and Collins, 2009). Research has highlighted that firms' likelihood of financial distress is closely related to directors' resources (Cameron, Kim and Whetten, 1987).…”

Section: Rmc Human Capital and The Likelihood Of Financial Distressmentioning

confidence: 99%

“…Research has highlighted that firms' likelihood of financial distress is closely related to directors' resources (Cameron, Kim and Whetten, 1987). Specifically, Daily (1995Daily ( , 1996 showed that a high proportion of outside directors help firms to re-emerge from bankruptcy, and firms with a high proportion of outside and affiliated directors have a reduced chance of bankruptcy. Arthaud-Day, Certo, Dalton, and Dalton (2006) also suggested that when firms face crises, changing directors with crucial resources has been considered an initial step to decrease the severity of the crises.…”

Section: Rmc Human Capital and The Likelihood Of Financial Distressmentioning

confidence: 99%

Does Firms' Risk Management Human Capital Reduce the Likelihood of Financial Distress?

Jia¹

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iii AbstractIn light of the corporate collapses and global financial crisis, risk management has been highlighted as an ever increasing important element of corporate governance.As risk management committees (RMC) bear the fundamental responsibility of risk management, RMCs' human capital performs a crucial role in risk management governance and warrants further investigation.The purpose of this study is to investigate the association between firms' RMC human capital and firms' management of risk, in terms of firm performance and the likelihood of financial distress. This study is motivated by the paucity of research on risk management governance and the Australian Security Exchange Corporate With respect to the association between RMCs, separate RMCs existence, and firms' management of risk in terms of firm performance and the likelihood of financial distress, the results revealed that the number of firms with a separate RMC remained stable over time, whereas there was an increasing trend of combined RMC establishment, and a decrease in the number of firms without a RMC. The regression results reveal that the existence of a RMC and a separate RMC were not significantly related to firm performance and the likelihood of financial distress. However, the findings show that the existence of a separate RMC moderated the relationship between firm risk and a firm's accounting performance. In terms of RMC human capital, the overall RMC human capital score was positively related to firm performance and market measurement of the likelihood of financial distress. With Does firms' risk management human capital reduce the likelihood of financial distress? v respect to individual RMC human capital characteristics, the total amount of experience (as a type of general human capital) was positively related to accounting performance, while RMC members' board tenure (as a type of firm-specific human capital) was negatively related to market performance.The findings make several important contributions. Firstly, this study contributes to the literature by providing empirical evidence about human capital theory from a risk management perspective, and draws on research to determine whether human capital is associated with firm performance and research that determines the association between risk management and firm performance. Secondly, this study informs policy setters about the current risk management practice in Australia, and provides implications for regulating risk management practices. Overall, the findings of this study highlight the importance of RMCs' human capital.

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“…The huge majority of bankruptcy detection models consider accounting and financial data only as explanatory factors (Beaver, 1967;Altman, 1968;Refait, 2004). Relatively few studies (Chaganti, 1985;Hambrick & D'Aveni, 1992;Gales & Kesner, 1994;Daily & Dalton, 1994;Daily, 1996;Donoher, 2004;Lajili & Zéghal, 2010;Platt & Platt, 2012) analyzed the relation between the occurrence of bankruptcy filing and the governance structure of firms. We suggest this recent context of crisis provides a unique research setting to study corporate governance and its impact on financial distress.…”

Section: Introductionmentioning

confidence: 99%

Financial Distress and Corporate Governance around Lehman Brothers Bankruptcy

Brédart¹

2014

IBR

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United States faced a growing number of corporate bankruptcies during the subprime crisis. This article is intended to determine the effectiveness of some governance mechanisms on the financial distress probability of companies over the period [2007][2008][2009]. This period is divided into two parts; we take the date of filing for chapter 11 of the company Lehman Brothers (15 December, 2008) as the cutting point between the mortgage and the financial phases of the crisis. Aiming to highlight the influence of corporate governance mechanisms on financial distress probability, we then use, for each sub period, logit models on paired samples of firms which half opted for legal protection due to financial and commercial difficulties. Our results indicate that, during the first sub period, combining the functions of CEO and chairman of the board of directors is beneficial to the survival of the firm, whereas, during the second sub period, capital ownership by the CEO appears to be an incentive to keep the firm on float. This paper seeks to add to the corporate governance literature by considering how certain corporate governance mechanisms impacted the perennity of companies during the subprime crisis.

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Governance Patterns in Bankruptcy Reorganizations

Cited by 105 publications

References 37 publications

Institutional Investor Portfolio Stability and Post-IPO Firm Survival: A Contingency Approach

Institutional Investor Portfolio Stability and Post-IPO Firm Survival: A Contingency Approach

Does Firms' Risk Management Human Capital Reduce the Likelihood of Financial Distress?

Financial Distress and Corporate Governance around Lehman Brothers Bankruptcy

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