| This dissertation examined the timing of the bankruptcy decision, and specifically the distinctions between filing firms and firms that are equally distressed but manage to avoid filing. The study also addressed distinctions among filing firms with respect to solvency at the time of filing to determine the influences on the timing of the bankruptcy decision. Resource-based theory and agency theory were incorporated as alternative explanatory frameworks, based upon potential views of bankruptcy as emanating from resource deficiencies or the dynamics of corporate control.; Firms included in the sample were publicly traded firms filing bankruptcy between 1990 and 1996, inclusive. These firms were matched with nonfiling firms on the basis of industry, size, and leverage as of the year in which their counterpart firms filed bankruptcy. Data were collected for the year preceding the filing year for both sets of companies, and the hypotheses were tested using logistic regression.; Results of the study were robust for aspects of both theoretical frameworks. With respect to resource-based theory, related diversification was negatively associated with the incidence of bankruptcy, a result consistent with notions of leveraging core competencies and specialized resource bases. Agency theoretical results were somewhat stronger, with clear effects observed for inside equity, and both secured debt and current debt percentages. Partial support was found also for the effect of investor board representation. Specifically, the results suggest that each of these factors moderates the relationship between firm solvency and filing, such that high levels of each are associated with filing at higher levels of solvency than when low levels of each are observed. In most instances, nonfiling firms are more solvent than filing firms at either level of the moderator variable. |
