Corporate governance, blockholders, and financial distress: Global evidence

Mehmet Celiktas, Mine Ugurlu and Neslihan Yilmaz

Accounting and Finance, 2025, vol. 65, issue 2, 1347-1398

Abstract: This study examines the impact of corporate governance mechanisms and ownership structure on financial distress for 23 developed and 27 emerging countries across different markets and legal systems and during the crisis period. In developed markets, CEO duality increases distress, which can be mitigated through independent boards and majority blockholders. Independent boards, specifically in common‐law countries, alleviate distress, yet, may escalate the adverse impact of blockholders as independent boards may not be effective monitors. In emerging markets (EM), independent boards increase distress, potentially reflecting political appointments. Institutional blockholders hurt firm financial health, though, strategic blockholders may substitute for board monitoring in weak governance environments. During the crisis period, a larger and independent board has the potential to decrease financial distress.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:65:y:2025:i:2:p:1347-1398

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