Theo Christopher

Corporate governance and post‐bankruptcy reorganisation performance : Evidence from Thailand

Purpose - This research seeks to investigate the role of key corporate governance mechanisms in determining a firms post-bankruptcy performance following reorganisation. Design/methodology/approach - The study is based on agency theory and uses a unique sample of 111 filing companies whose reorganisation plans have been confirmed by the Thai Central Bankruptcy Court during the period 1999-2002. Findings - The results indicate that monitoring and incentive mechanisms are significant determinants of a firms post-bankruptcy performance. The key monitoring mechanism is ownership concentration, measured by shares held by the largest shareholder, whereas the critical incentive mechanisms are cash compensation and percentage of common shares held by the plan administrator. The results indicate that these mechanisms can mitigate agency problems in previously insolvent companies and increase post-bankruptcy performance over a three year period. Originality/value - The study is timely given that many organisations are facing rebuilding programs following the impact of the global financial crisis. Prior research in Thailand and elsewhere has not measured bankruptcy reorganisation outcomes in terms of the difference of actual financial performance to predicted performance and in relation to the governance factors of the reorganisation process. Neither has this aspect been considered within an agency theory framework. This provides a unique opportunity to consider these variables based on the theoretical framework of agency theory and to evaluate the importance of governance mechanisms in reorganisation proceedings.

Successful turnaround strategy: Thailand evidence

Purpose – This research seeks to determine the success of turnaround strategies adopted by corporations in Thailand following post‐bankruptcy reorganization plans approved by the Thai Central Bankruptcy Court.Design/methodology/approach – The study uses a sample of 101 companies whose reorganization plans have been confirmed by the Thai Central Bankruptcy Court in the period 1999‐2002, with performance measures to 2005.Findings – The results indicate that over a three‐year reorganization period successful companies were found to be most likely to adopt cost and expense reduction, company size reduction and disposal of non‐core assets while operational strategies aimed at reconfiguring internal operations and systems were not likely to be associated with successful companies.Practical implications – The data suggests, subject to limitations, the selection of restructuring methods may differ between those companies which successfully reform and those which do not. Companies pursuing successful turnaround st...

Determinants of the Choice of Reporting the Direct Method or Indirect Method of Cash Flow from Operating Activities: Malaysian Evidence

This study examines the incentives motivating listed companies in Malaysia to voluntarily choose the Direct Method over the Indirect Method in reporting cash flow from operating (CFO) activities in their 1997 annual financial reports following the adoption of the IAS 7 (Revised) Statement of Cash Flows (SCF), which was used prior to the current standard MASB No. 5 Cash Flow Statement promulgated by the Malaysian Accounting Standards Board (MASB) in 1999. Adopting the signalling perspective, the general hypothesis of this study is that the choice of the Direct Method over the Indirect Method in reporting CFO activities is to maximize a firm’s value via engagement in quality signalling to the market. Specifically, it is hypothesised that such decision is influenced by the firm’s level of managerial efficiency, financial risk, size, its auditor, and industry membership. The sample consists of 231 firms listed on the Kuala Lumpur Stock Exchange; 32 firms in the treatment group (Direct Method) and 199 firms in the control group (Indirect Method). Based on the results from the univariate and multivariate analyses, we found all variables to be in the hypothesised directions. However, we infer that the decision to choose the Direct Method for reporting CFO activities in SCF is significantly influenced by the firm’s level of managerial efficiency, size, and its auditor. Thus, there is support for the general hypothesis of maximization of the value of the firm via quality signalling. The authors gratefully appreciate the helpful comments of the discussant and workshop participants at the 11th Asian‐Pacific Conference on International Accounting