Pursuing Firm Economic Sustainability through Debt Restructuring Agreements in Italy: An Empirical Analysis

Alessandro Danovi, Francesca Magno and Giovanna Dossena
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Alessandro Danovi: Department of Management, Economics and Quantitative Methods, University of Bergamo, 24127 Bergamo, Italy
Francesca Magno: Department of Management, Economics and Quantitative Methods, University of Bergamo, 24127 Bergamo, Italy
Giovanna Dossena: Department of Management, Economics and Quantitative Methods, University of Bergamo, 24127 Bergamo, Italy

Sustainability, 2018, vol. 10, issue 12, 1-10

Abstract: Corporate restructuring has become a central topic for both academics and practitioners, particularly following the global financial crisis. In particular, there is increasing interest in understanding the effectiveness of turnaround strategies, which are defined as attempts to restore the performance of firms after periods of downfall. However, despite the relevance of this issue, there is a shortage of empirical evidence regarding the effectiveness of turnaround strategies related specifically to financial interventions. Through the support of an empirical analysis among Italian firms, this paper seeks to fill this significant gap in the available literature. In particular, we conducted an in-depth analysis of 262 debt restructuring agreement (DRA) plans that occurred between 2005 and 2013 in 16 bankruptcy courts. Our study confirms the positive effect of changes in the top management team. This measure can be both a symbolic signal of genuine willingness to modify the strategy of the firm, and a real manifestation of the necessity to have new skills to complete the turnaround. In addition, the adoption of operational and strategic/asset measures increase the likelihood of turnaround success.

Keywords: turnaround strategy; debt restructuring agreement; global economic crisis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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