Outline

  • Abstract
  • Jel
  • Keywords
  • 1. Introduction
  • 2. Hypotheses Development
  • 2.1. Board Independence
  • 2.2. Blockholder Ownership
  • 2.3. Ceo–chair Duality
  • 2.4. Director Ownership
  • 2.5. Audit Committee
  • 3. Data
  • 4. Variable Description
  • 4.1. Dependent Variable
  • 4.2. Independent Variables
  • 5. Empirical Model, Findings and Discussion
  • 5.1. Descriptive Statistics and Analysis
  • 5.2. Zmijewski Financial Score (zfs)
  • 5.3. Causality and Endogeneity Assessment
  • 6. Summary and Conclusion
  • Acknowledgements
  • References

رئوس مطالب

  • چکیده
  • کلیدواژه ها
  • 1. مقدمه
  • 2. توسعه فرضیات
  • 2.1 استقلال هیئت مدیره
  • 2.2 مالکیت سهام دار اصلی
  • 2.3 مدیر ارشد اجرایی - دوگانگی کرسی ریاست
  • 2. 4 مالکیت مدیر
  • 2.5 کمیته ممیزی
  • 3. داده
  • 4. توصیف متغیر
  • 4.1 متغیر وابسته
  • 4.2 متغیرهای مستقل
  • 5. مدل تجربی ، یافته ها و بحث
  • 5.1 آمار ها و توصیفی و تحلیل
  • 5.2 امتیاز مالی( Zmijewski ( ZFS
  • 5 -3 براورد رابطه علت و معلولی و درونی بودن
  • 6. خلاصه و نتیجه گیری

Abstract

We examine the role of voluntary adoption of corporate governance mechanisms in mitigating the financial distress status of firms. Using a sample of 171 financially distressed and 106 healthy listed Australian firms over the 5-year period prior to the introduction of the ASX Corporate Governance Council Code in 2003, we find support for the argument that the adoption of certain corporate governance mechanisms is beneficial for firms, as reflected in a reduced likelihood of financial distress. In particular, greater levels of blockholder and director ownership and the existence of a separate audit committee are associated with lower financial distress likelihood. We also find causal evidence that the voluntary adoption of particular corporate governance structures leads to lower levels of financial distress, rather than financial distress recognition leading to corporate governance structural reform.

Keywords: - - - -

6. Summary and conclusion

We examine the association between various corporate governance attributes and the financial distress status of Australian listed firms for the period 1999–2003. The focus is placed on voluntary adoption of governance structures and decision-making by sample firms prior to the introduction of formal corporate governance requirements by the Australian Securities Exchange in 2003. Our results show that both greater levels of director and blockholder ownership and the existence of a board audit committee reduce the likelihood of financial distress. These findings persist under various definitions of financial distress status. Using a simultaneous equations system to evaluate the issue of causality, our analysis indicates that causality runs from corporate governance to financial distress status, suggesting that voluntary adoption of certain corporate governance structures reduces financial distress.

Our findings have implications for the evaluation of financially distressed firms and for the ongoing corporate governance reform process in Australia. Firstly, our findings will assist investors incorporating relevant corporate governance attributes as part of their information set when evaluating the underlying risk and investment attractiveness of firms. Secondly, our results are important for policymakers (ASX Corporate Governance Council), when formulating best practice governance structures.

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