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The effects of financial distress and capital structure on the work effort of outside directors

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Author Info

  • Chou, Hsin-I
  • Li, Hui
  • Yin, Xiangkang

Abstract

This 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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File URL: http://www.sciencedirect.com/science/article/B6VFG-4Y0519T-1/2/8dd10b7ccbed5aa67b1106c9b8da121c
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Empirical Finance.

Volume (Year): 17 (2010)
Issue (Month): 3 (June)
Pages: 300-312

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Handle: RePEc:eee:empfin:v:17:y:2010:i:3:p:300-312

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Web page: http://www.elsevier.com/locate/jempfin

Related research

Keywords: Work effort Outside director Financial distress Financial leverage Board meeting;

References

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  23. Kenneth V. Peasnell & Peter F. Pope & Steven Young, 2003. "Managerial Equity Ownership and the Demand for Outside Directors," European Financial Management, European Financial Management Association, vol. 9(2), pages 231-250.
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Citations

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Cited by:
  1. Sami BEN JABEUR & Youssef FAHMI, 2014. "Default Prediction for Small-Medium Enterprises in France: A comparative approach," Working Papers 2014-319, Department of Research, Ipag Business School.
  2. Sami BEN JABEUR & Youssef FAHMI, 2014. "Predicting Business Failure Using Data-Mining Methods," Working Papers 2014-308, Department of Research, Ipag Business School.
  3. Chou, Hsin-I & Chung, Huimin & Yin, Xiangkang, 2013. "Attendance of board meetings and company performance: Evidence from Taiwan," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4157-4171.
  4. Sami Ben Jabeur & Youssef Fahmi, 2014. "Les modèles de prévision de la défaillance des entreprises françaises : une approche comparative," Working Papers 2014-317, Department of Research, Ipag Business School.

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