Ultimate Controllers, Ownership and the Probability of Insolvency in Financially Distressed Firms

Jannine Poletti-Hughes, Aydin Ozkan

Research output: Contribution to journalArticle

6 Citations (Scopus)


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 languageEnglish
Pages (from-to)36-50
Number of pages15
JournalManagerial and Decision Economics
Issue number1
Early online date20 Mar 2013
Publication statusPublished - Jan 2014
Externally publishedYes


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