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Management-to-staff ratio and a firm's exit

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  • Stef, Nicolae
  • Zenou, Emmanuel

Abstract

We investigate the predictive ability of the management-to-staff ratio for the arbitration between liquidation and voluntary dissolution. Using a sample of 697 French firms covering the period from 2011 to 2017, our hazard model shows that firms with more managerial staff tend to have a lower probability of exiting through liquidation rather than through voluntary dissolution. Compared to liquidation, voluntary dissolution not only provides the opportunity to organize the liquidation of a firm's remaining assets, but it also better preserves managers’ reputation.

Suggested Citation

  • Stef, Nicolae & Zenou, Emmanuel, 2021. "Management-to-staff ratio and a firm's exit," Journal of Business Research, Elsevier, vol. 125(C), pages 252-260.
    • Handle: RePEc:eee:jbrese:v:125:y:2021:i:c:p:252-260
    DOI: 10.1016/j.jbusres.2020.12.027
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    References listed on IDEAS

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