Board structure and financial distress in Brazilian firms

Guilherme Freitas Cardoso · Fernanda Maciel Peixoto · Flávio Barboza

38 citations0/0 files storedInternational Journal of Managerial Finance

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Corporate Insolvency and Governance Financial Distress and Bankruptcy Prediction

Abstract

Purpose The purpose of this paper is to investigate what board characteristics affect companies in periods of financial distress (FD) among non-financial Brazilian firms and examine which model best fits to predict FD. Design/methodology/approach The sample comprises data from 2010 to 2016 of the non-financial Brazilian firms listed on the Brazilian Stock Exchange. To measure this relationship, a conditional logistic regression is performed. Findings A U-shaped relationship between the size of the board of directors (BD) and FD is found in all models, indicating an optimal number of six members in the BD during the period of FD. However, board characteristics (related to composition and directors’ independence) are insufficient to align the shareholders’ interests and unsuitable for avoiding or even reducing FD in firms when other factors are neglected. Furthermore, the results reveal what variables provide the best-fitting models to predict FD. Originality/value To the best of the authors’ knowledge, this is the first study that investigates how the composition of the BD affects the FD likelihood in the Brazilian context. The findings are potentially of interest to researchers and practitioners since this paper contributes to the growing literature on the influence of corporate governance mechanisms in periods of FD and the understanding of its prediction models.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 38 citations exist upstream.

References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1983Separation of Ownership and Control 1993The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems 1996Higher market valuation of companies with a small board of directors 2004The Cash Flow Sensitivity of Cash 1997An Empirical Analysis of the Relation between the Board of Director Composition and Financial Statement Fraud 2003Boards of Directors and Firm Performance: Integrating Agency and Resource Dependence Perspectives 1992A Modest Proposal for Improved Corporate Governance

Cited by

2021The effect of intellectual capital on fraud in financial statements 2022The effect of social and intellectual capital on fraud and money laundering in Iraq 2022Corporate governance and financial distress: A review of the theoretical and empirical literature 2023Does board diversity reduce the likelihood of financial distress in the presence of a powerful Chinese CEO?2021The Effect of Board and Ownership Structure on the Possibility of Financial Distress

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.