Corporate governance and bankruptcy risk

Wu, Sean (2016) Corporate governance and bankruptcy risk. Journal of Accounting Auditing and Finance, 31(2), pp. 163-202.

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Abstract

We examine how firm characteristics, particularly the degree of firm complexity and the firm’s need for specialty knowledge, affect the relationship between corporate governance and the risk of bankruptcy. We find that having larger boards reduces the risk of bankruptcy only for complex firms. Our results also suggest that the proportion of inside directors on the board is inversely associated with the risk of bankruptcy in firms that require more specialist knowledge, and that the reverse is true in technically unsophisticated firms. The results further reveal that the additional explanatory power from corporate governance variables becomes stronger as the time to bankruptcy is increased, implying that although corporate governance variables are important predictors, governance changes are likely to be too late to save a firm on the verge of bankruptcy.

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ID Code: 78940
Item Type: Journal Article
Refereed: Yes
Additional URLs:
Keywords: Bankruptcy, corporate governance, board characteristics, CEO characteristics, management characteristics
DOI: 10.1177/0148558X14560898
ISSN: 0148-558X
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 2014 The Author
Deposited On: 26 Nov 2014 23:55
Last Modified: 02 May 2016 12:20

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