Insolvency administration as a strategic response to financial distress

James Routledge*, David Morrison

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

5 Citations (Scopus)

Abstract

This study considers whether the strategic decision to enter voluntary administration (VA) rather than to trade the company's business for a protracted period of declining performance is systematically related to the effective monitoring of management decision-making. Analysis that tests the association between strategic entry into VA and the likelihood that a company will reorganize in VA is also presented. We find about half of the companies in our sample entered VA as a strategic choice. The likelihood of strategic entry to VA increased with the proportion of independent board directors, the existence of an audit committee and a dual CEO/chair board structure. Subsequent analysis of reorganization outcomes suggests that strategic entry into VA improves prospects for a successful reorganization.

Original languageEnglish
Pages (from-to)441-459
Number of pages19
JournalAustralian Journal of Management
Volume37
Issue number3
DOIs
Publication statusPublished - Dec 2012

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