Corporate Governance to Prevent Financial Distress Evidence from Corporate Governance Perceptions Index of Indonesian Companies

Rahmawati, Teti; Hendriyana, Yana

doi:10.25134/ijbe.v1i1.1360

Cited by 2 publications

(1 citation statement)

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“…This raises the question that constitutes the objective of this paper: Does corporate governance cure financial distress? In assessing this question, a look at extant literature showed that while some researchers (Adegbie, Akintoye, & Ashaolu, 2019;Ali, Liu, & Su, 2018;Ayoola & Obokoh, 2018;Martins & Junior, 2019;Manab, Aziz, & Othman, 2017;Miglani, Ahmed, & Henry, 2015;Witiastuti & Suryandari, 2016) argue that financial distress could be avoided if a firm implements good corporate governance strategy, others (Afrifa & Tauringana, 2015;Khan & Javid, 2016;Rahmawati & Handriyana, 2018) claim that compliance with corporate governance codes is not enough to prevent financial distress. A study by three Australian Professors of Accounting (Abernethy, Grafton, & Soderstrom, 2016) gave the following conclusions "while it may be true that a firm that scores highly on corporate governance measures is less likely to default in the future, we cannot say for certain that it avoided default because of these attributes" (p.8).…”

Section: Introductionmentioning

confidence: 99%

Does Corporate Governance Cure Financial Distress? Case Study Analysis of Distressed Firms

Faith Amede,

Ilaboya

2024

Ekonomska misao i praksa

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The paper examined the concepts of corporate governance and financial distress. This was achieved by a review of case studies. The review of literature showed that few studies have actually attempted to address the question of whether corporate governance can cure a financially distressed firm. In an attempt to fill this gap, the study this paper examined corporate governance cases of firms that were financially distressed or eventually collapsed. The idea is to be able to take a position as to whether corporate governance can be used as an antidote to financial distress. To achieve this objective, the paper conducted a case study analysis of financial distress cases from different jurisdictions (Multinational, African and Nigerian firms). Documentary evidences on financial distress and challenges of corporate governance were also reviewed. The result of the case study analyses showed that corporate governance can be a cure for financially distressed firms with a condition that key stakeholders in the firm implement the corporate governance provisions.

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