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Management-to-staff ratio and a firm's exit

Nicolae Stef and Emmanuel Zenou

Journal of Business Research, 2021, vol. 125, issue C, 252-260

Abstract: We investigate the predictive ability of the management-to-staff ratio for the arbitration between liquidation and voluntary dissolution. Using a sample of 697 French firms covering the period from 2011 to 2017, our hazard model shows that firms with more managerial staff tend to have a lower probability of exiting through liquidation rather than through voluntary dissolution. Compared to liquidation, voluntary dissolution not only provides the opportunity to organize the liquidation of a firm's remaining assets, but it also better preserves managers’ reputation.

Keywords: Management; Liquidation; Voluntary dissolution; Hazard model (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.jbusres.2020.12.027

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