Abstract
This paper investigates the impact of corporate ownership and control on the outcome of financial distress. It is argued that the likelihood of financial distress resulting in insolvency depends on whether firms have controllers, the type of controllers and their cash flow ownership. Using a sample of 484 UK firms, 81 of which filed for insolvency, we show that financially distressed firms with controllers are more likely to be insolvent than widely held firms, where the probability of insolvency is greater when controllers are family or financial institutions. However, the probability of insolvency reduces significantly as the controllers' cash flow ownership increases beyond 10%.
Original language | English |
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Pages (from-to) | 36-50 |
Number of pages | 15 |
Journal | Managerial and Decision Economics |
Volume | 35 |
Issue number | 1 |
Early online date | 20 Mar 2013 |
DOIs | |
Publication status | Published - 1 Jan 2014 |
Externally published | Yes |