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Conflicts of Interest, Employment Decisions, and Debt Restructuring: Evidence from Spanish Firms in Financial Distress

Author

Listed:
  • Padilla, A.J.
  • Requejo, A.

Abstract

We examine the employment decisions of Spanish manufacturing firms in financial distress. Our sample comprises 4,566 firms operating during 1983-1994. We find that firms in distress reduce their employment significantly. These reductions are positively associated with asset sales, but cannot be fully explained by them. They are also negatively related to firm size and to firing costs. Our main finding, however, is that firms that restructure their debt in response to distress are more likely to reduce their employment.

Suggested Citation

  • Padilla, A.J. & Requejo, A., 1999. "Conflicts of Interest, Employment Decisions, and Debt Restructuring: Evidence from Spanish Firms in Financial Distress," Papers 9910, Centro de Estudios Monetarios Y Financieros-.
    • Handle: RePEc:fth:cemfdt:9910
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    Cited by:

    1. Palacín Sánchez, María José & Alencar García, Artur & Canto Cuevas, Francisco Javier, 2023. "Financial distress and corporate restructuring: a case study," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).

    More about this item

    Keywords

    BANKS ; DEBT ; BUSINESS FINANCING ; EMPLOYMENT;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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