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Gilson et al. (1990) find that 50% of distressed firms successfully employ private financial restructuring during distress.
"The robot was distracting the child during distress, but also giving instruction for how to cope," said Dr. Beran.
Furthermore, dividend cuts are observed as an additional liquidity improvement measure during distress.
Thus, debt covenants can act as an effective disciplinary mechanism during distress (DeAngelo et al. 2002).
However, Jostarndt and Sautner (2008) cannot find a correlation between ownership concentration and managerial replacement likelihood during distress.
The mixed effects of management's replacement during distress lead to the conclusion that they are heavily contingent on contextual factors.
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Consequently, studies on workforce restructuring during corporate distress offer contradictory results.
From a behavioral theory perspective, CEO dismissal during corporate distress circumvents a "threat-rigidity response" in the face of distress (Daily and Dalton 1995; Tushman and Rosenkopf 1996).
Ownership becomes an important moderator of turnaround moves' effectiveness with respect to information asymmetries and dispersed interests between stakeholders and management during corporate distress (Mata and Portugal 2000).
Therefore, innovation plays a critical role during corporate distress, enabling firms to charge an innovation premium (Cefis and Marsili 2005; Ketchen and Palmer 1999).
Barker et al. (2001) conclude that little systematic evidence exists to prove that replacements lead to organizational change during corporate distress.
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