The effects of financial distress and capital structure on the work effort of outside directors

Hsin-I Chou, Hui Li and Xiangkang Yin

Journal of Empirical Finance, 2010, vol. 17, issue 3, 300-312

Abstract: This paper investigates the conflict of interests between shareholders and debtholders by examining the work effort of outside directors when a company experiences financial distress or has a high financial leverage. We find that at both company level and individual director level: (i) outside directors of a firm with higher financial distress exert less work effort in controlling for financial leverage; (ii) outside directors of a firm with a higher financial leverage work harder controlling for financial distress.

Keywords: Work; effort; Outside; director; Financial; distress; Financial; leverage; Board; meeting (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:17:y:2010:i:3:p:300-312

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