Financial distress: Lifecycle and corporate restructuring

SzeKee Koh, Robert B. Durand, Lele Dai and Millicent Chang

Journal of Corporate Finance, 2015, vol. 33, issue C, 19-33

Abstract: A firm's lifecycle consists of birth, growth, maturity and decline. We examine the strategies that firms choose when facing financial distress and present evidence that these choices are influenced by the corporate lifecycle. This influence is most pronounced in the choice of financial restructuring strategies such as reducing dividends or changing capital structure. We also examine if the way firms face financial distress affects the likelihood of recovery. We find that reducing investment and dividends are associated with recovery for all firms, but there is little influence of lifecycle.

Keywords: Lifecycle theory; Financial distress; Restructuring; Distance to default (search for similar items in EconPapers)
JEL-codes: G33 G34 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (36)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:33:y:2015:i:c:p:19-33

DOI: 10.1016/j.jcorpfin.2015.04.004

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