Insolvency administration as a strategic response to financial distressAustralian Journal of Management
Date of this Version4-5-2012
Document TypeJournal Article
AbstractThis study considers whether the strategic decision to enter voluntary administration (VA) rather than to trade the company’s business for a protracted period of declining performance is systematically related to the effective monitoring of management decision-making. Analysis that tests the association between strategic entry into VA and the likelihood that a company will reorganize in VA is also presented. We find about half of the companies in our sample entered VA as a strategic choice. The likelihood of strategic entry to VA increased with the proportion of independent board directors, the existence of an audit committee and a dual CEO/chair board structure. Subsequent analysis of reorganization outcomes suggests that strategic entry into VA improves prospects for a successful reorganization.
Citation InformationJames Routledge and David Morrison. "Insolvency administration as a strategic response to financial distress" Australian Journal of Management Vol. 37 Iss. 3 (2012) p. 441 - 459 ISSN: 0312-8962
Available at: http://works.bepress.com/james_routledge/14/