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

The Influence of Financial Distress and Independence of Board of Commissioners on Tax Aggressiveness

“…In a bankrupt situation, the board of commissioners' performance benefits the debtors since they are prioritized more than its shareholders in residual claims. 8 The decreasing marginal benefit resulted from an implementation of corporate governance in a company facing financial distress will dilute or even remove the monitoring function conducted by independent commissioners. Consequently, in the research, findings corroborate that there is a significant negative relationship between financial distress and outside directors' performance levels.…”

“…This implies that the board of commissioners' performance benefits the debtors further, since they are prioritized over shareholders in terms of residual claims. 8 This research aims to examine the influence of financial distress and the independence of boards of commissioners on tax aggressiveness. This research also uses a model illustrated 9 with some modifications.…”

Coverage of financing deficit in firms in financial distress under the pecking order theory

“…However, many fi rms cannot quickly adjust their debt in response to changes in their target debt because they bear transaction costs. Firms in fi nancial distress have a lot of trouble reaching their optimal capital structure proposed by the trade-off theory because they have high transaction costs (Asquith, Gertner, & Scharfstein, 1994;Chou, Li, & Yin, 2010). To reduce their debts, fi rms in fi nancial distress must negotiate new payment terms with creditors or sell assets that implies complicated adjustments.…”

“…Agca and Mozumdar (2004) and Lemmon and Zender (2010) propose a concave relationship between net debt issued and fi nancing defi cit, which enables a less strict fi nancial hierarchy of the pecking order theory. On the other hand, several authors fi nd evidence consistent with the trade-off theory (Cotei, Farhat, & Abugri, 2011;Flannery & Rangan, 2006;Frank & Goyal, 2009). Besides, some studies tend to bear out both theories.…”

Hubungan Saling Pengaruh Lembaga Pengarah dan Prestasi Firma: Perspektif Rangkaian Sosial

“…Maka, hubungan pengarah tidak lagi dilihat sebagai mekanisme kawalan, sebaliknya bermanfaat untuk memindahkan pengetahuan antara organisasi (O'Hagan & Green 2004). Namun, ianya selari dengan penerangan berhubung modal sosial, hubungan saling pengaruh turut memberi implikasi negatif, antaranya pemantauan yang rendah (Hsu & Li 2009), penyataan semula kewangan fi rma (Fich & Shivdasani 2006), kurangnya komitmen hadir mesyuarat (Chou, Li & Yin 2010), bayaran pampasan ketua pegawai eksekutif yang tinggi (Fich & White 2005) serta wujudnya pakatan rahsia dan kronisme sosial (Begley et al 2010). Akibat perbezaan ini, dapatan mengenai kesan hubungan saling pengaruh tidak konsisten.…”