Insolvency administration as a strategic response to financial distress/ created by James Routledge and David Morrison

By:

Routledge, James [author]

Contributor(s):

Morrison, David L [co author]

Material type: Text

TextSeries: Australian journal of management ; Volume 37, number 3,Los Angeles : Sage, 2012Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

03128962

Subject(s):

Corporate governance -- Insolvency -- Regression analysis -- Australia

LOC classification:

HD31 AUS

Online resources:

Click here to access online

Abstract: This 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.

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Holdings
Item type	Current library	Call number	Vol info	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HD31 AUS (Browse shelf(Opens below))	Vol. 37, no.3 (pages 441-460)	Not for loan	For in house use only

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Previous	HD31 AUS The preferences of private equity investors in selecting target acquisitions : an international investigation/	HD31 AUS Public versus private takeovers of Australian stock exchange listed targets/	HD31 AUS Retirement savings investment choices in response to the global financial crisis: Australian evidence	HD31 AUS Insolvency administration as a strategic response to financial distress/	HD31 AUS Out-of-sample stock return predictability in Australia/	HD31 AUS Growth and accounting choice	HD31 AUS Unequal access to analyst research	Next

This 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.

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