Do self-serving managers choose Chapter 11 filing over out-of-court restructuring?

Dong-Kyoon Kim ()

Journal of Economics and Finance, 2006, vol. 30, issue 1, 105-114

Abstract: I investigate whether self-serving managers in financially distressed firms influence a firm’s decision on the choice of debt restructuring method. I show that there is a non-linear relationship between managerial ownership and the probability of Chapter 11 filing. I find that distressed firms are more likely to choose Chapter 11 with the increase of managerial ownership when managerial ownership is in the 5%–25% range. I also find a significant curvilinear relation between managerial ownership and the probability of Chapter 11. My results are consistent with the hypothesis that managerial ownership plays a significant role in corporate decisions. Copyright Academy of Economics and Finance 2006

Date: 2006
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DOI: 10.1007/BF02834278

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