The effects of financial distress and capital structure on the work effort of outside directors
AbstractThis paper investigates the conflict of interests between shareholders and debtholders by examining the work effort of outside directors when a company experiences financial distress or has a high financial leverage. We find that at both company level and individual director level: (i) outside directors of a firm with higher financial distress exert less work effort in controlling for financial leverage; (ii) outside directors of a firm with a higher financial leverage work harder controlling for financial distress.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Empirical Finance.
Volume (Year): 17 (2010)
Issue (Month): 3 (June)
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Web page: http://www.elsevier.com/locate/jempfin
Work effort Outside director Financial distress Financial leverage Board meeting;
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