Bankruptcy outcomes: Does the board matter? |
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| Authors: | Dahlia Robinson Michael Robinson Craig Sisneros |
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| Institution: | 1. School of Accountancy BSN3403, College of Business, University of South Florida, 4202 E. Fowler Avenue, Tampa, FL 33620, United States;2. Sykes College of Business, University of Tampa, 401 W. Kennedy Blvd., Tampa, FL 33606, United States;3. Business School, University of Colorado Denver, Campus Box 165, PO Box 173364, Denver, CO 80217-3364, United States |
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| Abstract: | We examine the association between board composition and bankruptcy outcomes. Preliminary analyses provide no evidence that the proportion of outside directors is significantly associated with the likelihood that a Chapter 11 firm liquidates. Further analyses indicate, however, that the relation between the proportion of outside directors and bankruptcy outcomes is a function of the outside directors' ownership. More specifically, we find that the association is positive when outside director ownership is low and negative when it is high. The overall evidence supports the notion that a one-size-fits-all approach to corporate governance is likely to result in suboptimal board structures and hinder firms' strategies for dealing with poor performance. |
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| Keywords: | Bankruptcy Corporate governance Outside directors |
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