The aim of this research was to study the effect of the composition and functioning of board committees on firms’ financial distress. Exponential, Weibull and Cox regression models were used to conduct a survival analysis on a sample of 273 Italian listed companies for the period 2004–2017, which indicated that the presence of non- executive members on remuneration and audit committees, and remuneration committees meeting more frequently may enhance firms’ stability. In contrast, a high frequency of nomination committee meetings seems to be positively related to the probability of financial distress. Although we only partially controlled for endogeneity issues, our findings contribute to the literature on financial distress-prediction models by deepening the importance of the composition and functioning of board committees (beyond other corporate governance variables and financial ratios). We can also provide firms with practical suggestions to promote financial stability.

May board committees reduce the probability of financial distress? A survival analysis on Italian listed companies / Lagasio, Valentina; Brogi, Marina; Gallucci, Carmen; Santullli, Rosalia. - In: INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS. - ISSN 1057-5219. - (2023).

May board committees reduce the probability of financial distress? A survival analysis on Italian listed companies

Valentina Lagasio;Marina Brogi;
2023

Abstract

The aim of this research was to study the effect of the composition and functioning of board committees on firms’ financial distress. Exponential, Weibull and Cox regression models were used to conduct a survival analysis on a sample of 273 Italian listed companies for the period 2004–2017, which indicated that the presence of non- executive members on remuneration and audit committees, and remuneration committees meeting more frequently may enhance firms’ stability. In contrast, a high frequency of nomination committee meetings seems to be positively related to the probability of financial distress. Although we only partially controlled for endogeneity issues, our findings contribute to the literature on financial distress-prediction models by deepening the importance of the composition and functioning of board committees (beyond other corporate governance variables and financial ratios). We can also provide firms with practical suggestions to promote financial stability.
2023
corporate governance; board committees; financial distress; survival analysis
01 Pubblicazione su rivista::01a Articolo in rivista
May board committees reduce the probability of financial distress? A survival analysis on Italian listed companies / Lagasio, Valentina; Brogi, Marina; Gallucci, Carmen; Santullli, Rosalia. - In: INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS. - ISSN 1057-5219. - (2023).
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1667994
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