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

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Abstract

I investigate whether self-serving managers in financially distressed firms influence a firm's decision on the choice of debt restructuring method. 1 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.

Original languageEnglish
Pages (from-to)105-114
Number of pages10
JournalJournal of Economics and Finance
Volume30
Issue number1
DOIs
StatePublished - 1 Jan 2006

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Managerial ownership
Chapter 11
Managers
Debt restructuring
Nonlinear relationships

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title = "Do self-serving managers choose Chapter 11 filing over out-of-court restructuring?",
abstract = "I investigate whether self-serving managers in financially distressed firms influence a firm's decision on the choice of debt restructuring method. 1 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.",
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Do self-serving managers choose Chapter 11 filing over out-of-court restructuring? / Kim, Dong-Kyoon.

In: Journal of Economics and Finance, Vol. 30, No. 1, 01.01.2006, p. 105-114.

Research output: Contribution to journalArticleResearchpeer-review

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AB - I investigate whether self-serving managers in financially distressed firms influence a firm's decision on the choice of debt restructuring method. 1 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.

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