Changes in Corporate Governance Structures Preceding and Following Chapter 11 Bankruptcy

摘要

The purpose of this study is to examine changes in corporate governance structures around the filing of Chapter 11 bankruptcy protection. Information was gathered for companies contained in the sample of the twenty largest Chapter 11 bankruptcies for the years 1995-1997. Data was collected for each company three years prior to filing, the year the company filed and three years post filing. The board of directors was classified into inside directors, gray directors and outside directors. Ownership was studied with regard to total board ownership in the company and the percentage each member held in comparison with other members. The members serving on the auditing committee and compensation committee were also recorded, as well as total committee size. Once the data was collected, the Wilcoxon Test and the matched pair test were used to detect significance. These tests both yielded a significant change for the following: a decrease in size of the audit committee, a decrease in the number of gray directors, a decrease in total board size, and an increase in the percentage of ownership per outside director. These restructuring changes support studies showing that certain characteristics of boards may prove to be more beneficial for a firm.