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Corporate Governance and Financial Distress: when structures have to change

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  • Michael J. Mumford

Abstract

This paper indicates some implications of corporate financial distress for corporate governance. Formal measures, laid down in statute and commercial law, and informal steps established by financial practice, both respond to the threat of insolvency by limiting (and sometimes removing) corporate control of incumbent management. Both need to be considered together in order to appreciate their effects in practice. Shifts in control are associated with UK statutory insolvency procedures, and the paper reviews accounting–based rules intended to protect creditors. It is argued that cash forecasts are the only effective basis for such rules.

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  • Michael J. Mumford, 2003. "Corporate Governance and Financial Distress: when structures have to change," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(1), pages 52-64, January.
    • Handle: RePEc:bla:corgov:v:11:y:2003:i:1:p:52-64
    DOI: 10.1111/1467-8683.00301
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    Cited by:

    1. Khaled Elsayed, 2011. "Board size and corporate performance: the missing role of board leadership structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(3), pages 415-446, August.
    2. James Routledge & David Morrison, 2012. "Insolvency administration as a strategic response to financial distress," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 441-459, December.

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