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Corporate Governance and Firm Survival

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  • M. Sinan Goktan
  • Robert Kieschnick
  • Rabih Moussawi

Abstract

We explore how various aspects of corporate governance influence the likelihood of a public corporation surviving as a separate public entity, after addressing potential endogeneity that arises from competing corporate exit outcomes: acquisitions, going†private transactions, and bankruptcies. We find that some corporate governance features are more important determinants of the form of a firm's exit than many economic factors that have figured prominently in prior research. We also find evidence that outsider†dominated boards and lower restrictions on internal governance play major roles in the way firms exit public markets, particularly when a firm's industry suffers a negative shock. Overall, our results suggest that failure to recognize competing risks produces biased estimates, resulting in faulty inferences.

Suggested Citation

  • M. Sinan Goktan & Robert Kieschnick & Rabih Moussawi, 2018. "Corporate Governance and Firm Survival," The Financial Review, Eastern Finance Association, vol. 53(2), pages 209-253, May.
    • Handle: RePEc:bla:finrev:v:53:y:2018:i:2:p:209-253
    DOI: 10.1111/fire.12161
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    Cited by:

    1. XU Peng, 2021. "Population Aging and Small Business Exits," Discussion papers 21091, Research Institute of Economy, Trade and Industry (RIETI).
    2. Elena Cefis & Cristina Bettinelli & Alex Coad & Orietta Marsili, 2022. "Understanding firm exit: a systematic literature review," Small Business Economics, Springer, vol. 59(2), pages 423-446, August.
    3. Sunaina Kanojia & Shasta Gupta, 2023. "Bankruptcy in Indian context: perspectives from corporate governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(2), pages 505-545, June.
    4. Karpoff, Jonathan M. & Schonlau, Robert & Wehrly, Eric, 2022. "Which antitakeover provisions deter takeovers?," Journal of Corporate Finance, Elsevier, vol. 75(C).
    5. Hanqiao Zhang, 2024. "Exit Spillovers of Foreign-invested Enterprises in Shenzhen's Electronics Manufacturing Industry," Papers 2404.18009, arXiv.org.
    6. Hsu, Ching-Yu & Chen, Sheng-Syan & Huang, Chia-Wei, 2021. "Board independence and PIPE offerings," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 478-500.
    7. Umair Bin Yousaf & Khalil Jebran & Irfan Ullah, 2024. "Corporate governance and financial distress: A review of the theoretical and empirical literature," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1627-1679, April.
    8. Wei Yu & Huiqin Huang & Keying Zhu, 2023. "Enhancing Construction Enterprise Financial Performance through Digital Inclusive Finance: An Insight into Supply Chain Finance," Sustainability, MDPI, vol. 15(13), pages 1-16, June.
    9. Elshandidy, Tamer & Elsayed, Mohamed, 2024. "The UK financial firms’ textual risk disclosure and market liquidity," Finance Research Letters, Elsevier, vol. 63(C).
    10. Zuluaga Arango, Paula & Rincón, Diego Useche & RojasBerrio, Sandra Patricia, 2023. "Relevancia, evolución y tendencias de la supervivencia empresarial. Una revisión de literatura en finanzas," Revista Tendencias, Universidad de Narino, vol. 24(1), pages 252-278, January.

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