Corporate Response to Distress: Evidence from the Asian Financial Crisis

FRB St. Louis Review, 2011, 93 (2), pp.127-154

Posted: 17 Jul 2006 Last revised: 30 Jul 2013

See all articles by Mara Faccio

Mara Faccio

Purdue University - Krannert School of Management; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Rajdeep Sengupta

Federal Reserve Bank of Kansas City

Date Written: 2011

Abstract

This paper provides a comprehensive examination of the ways in which companies respond to financial distress by restructuring their assets (through asset sales, mergers or liquidations) or liabilities during an economy-wide crisis. We contrast financial and corporate governance considerations and find strong support for the notion that, during a crisis, both financial constraints and corporate governance have a large impact on the restructuring choice.

Keywords: bankruptcy, liquidation, restructuring, corporate governance

JEL Classification: G33, G34

Suggested Citation

Faccio, Mara and Sengupta, Rajdeep, Corporate Response to Distress: Evidence from the Asian Financial Crisis (2011). FRB St. Louis Review, 2011, 93 (2), pp.127-154. Available at SSRN: https://ssrn.com/abstract=917160 or http://dx.doi.org/10.2139/ssrn.917160

Mara Faccio (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Rajdeep Sengupta

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
2,388
PlumX Metrics