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Bankruptcy risk, productivity and firm strategy

Author

Listed:
  • Daniel Bryan
  • Guy Dinesh Fernando
  • Arindam Tripathy

Abstract

Purpose - – The purpose of this paper is to examine the relationship between productivity, firm strategy and bankruptcy risk. Design/methodology/approach - – This paper uses data envelopment analysis to compute productivity of firms and uses archival data to empirically examine the relationship between productivity, firm strategy and bankruptcy risk. Findings - – The results indicate that productivity has a positive effect on reducing bankruptcy risk, and the results also indicate that pursuing either of the generic strategies successfully has a positive effect on reducing bankruptcy risk. The study also brings to light the mediating effect of productivity in the relationship between strategy and bankruptcy risk. Research limitations/implications - – The effect of productivity and firm strategy on bankruptcy risk is of importance to external stakeholders such as lenders and investors to evaluate the bankruptcy risk of such a firm. Internal stakeholders (managers and management consultants) will find this study expedient by using productivity enhancements and effective strategy implementation to mitigate bankruptcy risk. Originality/value - – This is the first paper to highlight the link between productivity and bankruptcy risk, firm strategy and bankruptcy risk and the mediation effects of productivity on the link between a cost leadership strategy and bankruptcy risk.

Suggested Citation

  • Daniel Bryan & Guy Dinesh Fernando & Arindam Tripathy, 2013. "Bankruptcy risk, productivity and firm strategy," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 12(4), pages 309-326, October.
    • Handle: RePEc:eme:rafpps:v:12:y:2013:i:4:p:309-326
    DOI: 10.1108/RAF-06-2012-0052
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    Citations

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    Cited by:

    1. Muhammad Anwar, 2018. "BUSINESS MODEL INNOVATION AND SMEs PERFORMANCE — DOES COMPETITIVE ADVANTAGE MEDIATE?," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 22(07), pages 1-31, October.
    2. Denila Jinny Arulraj & Thillai Rajan Annamalai, 2020. "Firms’ Financing Choices and Firm Productivity: Evidence from an Emerging Economy," International Journal of Global Business and Competitiveness, Springer, vol. 15(1), pages 35-48, June.
    3. Hutchinson, Marion & Seamer, Michael & Chapple, Larelle (Ellie), 2015. "Institutional Investors, Risk/Performance and Corporate Governance," The International Journal of Accounting, Elsevier, vol. 50(1), pages 31-52.
    4. Denila Jinny Arulraj & Thillai Rajan Annamalai, 0. "Firms’ Financing Choices and Firm Productivity: Evidence from an Emerging Economy," International Journal of Global Business and Competitiveness, Springer, vol. 0, pages 1-14.
    5. Ahsan Akbar & Minhas Akbar & Wenjin Tang & Muhammad Azeem Qureshi, 2019. "Is Bankruptcy Risk Tied to Corporate Life-Cycle? Evidence from Pakistan," Sustainability, MDPI, vol. 11(3), pages 1-22, January.
    6. Minhas Akbar & Ahsan Akbar & Petra Maresova & Minghui Yang & Hafiz Muhammad Arshad, 2020. "Unraveling the Bankruptcy Risk‒Return Paradox across the Corporate Life Cycle," Sustainability, MDPI, vol. 12(9), pages 1-19, April.
    7. Ji, Yu & Shi, Lina & Zhang, Shunming, 2022. "Digital finance and corporate bankruptcy risk: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    8. Zhang, Dongyang, 2023. "Subsidy expiration and greenwashing decision: Is there a role of bankruptcy risk?," Energy Economics, Elsevier, vol. 118(C).

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