This study examines the interaction between insolvency proceedings and strategic variables and their relationship with firm survival. Unlike previous research, this study considers the firm’s legal ...status, including insolvency proceedings, and fills a gap in the literature by considering legal considerations in business studies. Adopting a legitimacy perspective, we employ a Cox proportional hazards model to construct a survival model based on a theoretical framework encompassing insolvency proceedings retrenchment, firm age, and causes of financial distress. Our sample consists of French SMEs facing financial difficulties. The findings reveal that initiating insolvency proceedings is negatively associated with firm survival. However, retrenchment of employees or assets during insolvency proceedings is associated with a higher likelihood of survival. Contrary to expectations, firm age showed a negative association with firm survival during the insolvency proceedings. Moreover, the study revealed a positive association between insolvency proceedings and firm survival in cases of firm-specific financial distress. This research provides new insights into the relationship between insolvency proceedings and firm survival.
This study investigates CEOs’ advice-seeking behavior in small- and medium-sized enterprises (SMEs) and its influence on managing the financial difficulties these firms face. Grounded in the ...attention-based view of firms, our framework posits that CEOs’ advice seeking plays a sequential role in shaping a firm’s response to financial distress, by influencing CEOs’ awareness of financial difficulties and, subsequently, the restructuring process. We differentiate between advice sought from formal and informal advisors and consider top management team (TMT) functional diversity as a moderator. We test these hypotheses using a proprietary dataset of 407 financially distressed SMEs in France. Our results indicate that advice seeking significantly enhances CEOs’ decision to proceed to restructuring and this effect is mediated by the heightened financial awareness of CEOs. Furthermore, our research highlights the moderating role of the functional diversity of TMT members in the relationship between advice seeking and the restructuring decision.
This study aims to empirically investigate the impact of managers' characteristics on their choice between in-court and out-of-court restructuring. Based on the theory of upper echelons, we tested ...the preferences of 342 managers of financially distressed French firms regarding restructuring decisions. The overall findings of this study provide empirical support for the upper echelons theory. Specifically, managers with a long tenure and those with a high level of education are less likely to restructure before the court and are more likely to restructure privately. The findings also indicate that managers' age and gender do not significantly affect their choice between in-court and out-of-court restructuring. This study contributes to the literature on bankruptcy and corporate restructuring by turning the focus from firm characteristics to manager characteristics to explain restructuring decisions.
