Fixing troubled companies and sustainable emergence : evidence from China

Pao Yue-kong Library Electronic Theses Database

Fixing troubled companies and sustainable emergence : evidence from China

 

Author: Leung, Kim Ming Kenneth
Title: Fixing troubled companies and sustainable emergence : evidence from China
Degree: D.B.A.
Year: 2017
Subject: Hong Kong Polytechnic University -- Dissertations
Corporations -- Finance
Business enterprises -- Finance
Risk management
Department: Faculty of Business
Pages: iv, 114 pages : color illustrations
OneSearch: https://www.lib.polyu.edu.hk/bib/99102198
URI: http://theses.lib.polyu.edu.hk/handle/200/9153
Abstract: From time to time, throughout their business life cycles, some companies may experience financial distress. Financial distress adversely affects stakeholders such as shareholders, lenders, customers, suppliers, and employees, and in the extreme, the company could go bankrupt. Distress research has mostly been focused on predicting the probability of financial distress. There are not many studies on how to avoid repeated distress. I argue that when a company implements actions to fix its core (defined as making fundamental changes to the business operations) during period of distress, it can emerge in a more sustainable state. In this research, sustainable emergence refers to a company emerging from distress in such a way that being distressed does not occur again in the near future. My research is able to contribute to the literature by examining whether or not a company is able to emerge from financial distress sustainably if it acts to fix its core. I find that fixing the core increases the likelihood of sustainable emergence. Among the various actions a company might take, success in increasing market share and reducing general and administrative expenses are significant factors of sustainable emergence. In addition, I find that a bailout enhances the success of fixing the core regarding sustainable emergence.

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