Corporate governance and bankruptcy risk

Darrat, Ali F., Gray, Stephen, Park, Jung Chul and Wu, Yanhui (2014) Corporate governance and bankruptcy risk. Journal of Accounting, Auditing and Finance, 31 2: 163-202. doi:10.1177/0148558X14560898


Author Darrat, Ali F.
Gray, Stephen
Park, Jung Chul
Wu, Yanhui
Title Corporate governance and bankruptcy risk
Journal name Journal of Accounting, Auditing and Finance   Check publisher's open access policy
ISSN 0148-558X
2160-4061
Publication date 2014-12-16
Year available 2014
Sub-type Article (original research)
DOI 10.1177/0148558X14560898
Open Access Status
Volume 31
Issue 2
Start page 163
End page 202
Total pages 40
Place of publication Thousand Oaks, CA, United States
Publisher Sage Publications
Collection year 2015
Language eng
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.
Keyword Bankruptcy
Corporate governance
Board characteristics
CEO characteristics
Management characteristics
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Published online before print: 16 December 2014.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2015 Collection
UQ Business School Publications
 
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Created: Thu, 04 Dec 2014, 13:29:17 EST by Karen Morgan on behalf of UQ Business School