Corporate Restructuring Process Research Articles

ESG 공시와 물적분할 공시 관계에 관한 연구

This study aims to analyze the relationship between physical division and ESG announcement, examining the relationship between corporate restructuring processes and ESG announcement. Analyzing the differences in variables according to ESG announcement before the physical division, significant differences were found in companies with ESG announcement regarding asset size(ASSET), operating cash flow ratio(OCFAR), foreign ownership ratio(FOREIGNER), and debt ratio(DEBTR). However, no significant differences were found in the largest shareholder ownership ratio(LSH), Herfindahl index(HERFINDHAL), and price-to-book ratio(PBR). Examining the abnormal returns(AAR) and cumulative abnormal returns(CAAR) before and after the announcement date of physically divided companies, companies with ESG ratings recorded statistically significant higher returns around the announcement date. This indicates that ESG announcement can elicit positive market reactions for the company. Further, examining the stock price reactions around the announcement date of physically divided companies, those with ESG announcement showed higher abnormal returns(AAR). ESG announcement had a significant impact on cumulative abnormal returns(CAAR) in all models, with the price-to-book ratio(PBR) also showing significant impact in some models. This study comprehensively analyzes the relationship between physical division and ESG announcement, clearly demonstrating that ESG evaluation can positively impact corporate restructuring processes. Specifically, it investigates whether ESG announcement can mitigate the negative announcement effects of physical division. ESG announcement promotes sustainable corporate management and can positively impact companies undergoing restructuring processes such as physical division. This research provides meaningful insights for both managers and investors by clarifying the relationship between ESG announcement and physical division announcement.

The micro-credentials as a valid training «action?» In corporate restructuring processes

La formación tiene por objeto mejorar las competencias profesionales de las personas trabajadoras, así como su empleabilidad, de manera que, a través de aquella, se pueda garantizar el mantenimiento los trabajadores en el mercado laboral. Por su parte, el Estatuto de los Trabajadores ha previsto que las empresas que inicien un proceso de reestructuración tienen que programar una actividad formativa para sus trabajadores. Ésta deberá ser negociada en determinados supuestos con la representación legal de los trabajadores. Si bien, la actividad formativa a la que se refieren los diferentes preceptos de la norma laboral no se ha detallado, por lo que ésta podría consistir tanto en un curso breve, como pueden ser las microcredenciales, como en otro de una mayor extensión. Desde el año 2022, la Unión Europea está apostando por estas microformaciones, o lo que es lo mismo, por una fórmula de aprendizaje de corta duración, a través de las cuales se puedan acreditar las competencias adquiridas por las personas trabajadores o estudiantes. De esta forma, a través de pequeños módulos se podría cursar un itinerario formativo completo. Por ello, en el presente trabajo se valorará si las microcredenciales pueden considerarse una acción formativa válida para dar cumplimiento a la citada exigencia legal impuesta para los procesos de reestructuración empresarial.

Wag the Dog: How Embattled Corporate Leaders use Diversionary Tactics against Shareholder Activism

This paper examines how initiating a corporate restructuring process could help corporate leaders address threats to their power. Hypotheses are developed based on applying diversionary war theory—a theory advanced in political science—to the corporate context. Specifically, we theorize that when an activist shareholder submits a proposal to reduce corporate leaders’ power, those leaders will undertake corporate restructuring. This, we claim, will increase the perception among the shareholders that a strong and powerful leadership is necessary, resulting in less voting in support of reducing the leaders’ power. We test our theory using a sample of 978 proposals aimed at reducing corporate leaders’ power voted on at 305 firms between 2000 and 2016 and find support for both our hypotheses: First, shareholder proposals threatening leaders’ power receive less voting support in firms that just announced a process of corporate restructuring and second, corporate leaders are more likely to announce a process of corporate strategy restructuring right after a proposal to reduce their protection has been submitted. We discuss implications for the literature on shareholder activism, corporate leaders’ responses to shareholder pressures, and corporate governance in general.

DIRECTORS’ DUTY AND LIABILITY IN INSOLVENT TRADING

The effect of the novel coronavirus (Covid-19) pandemic has resulted in current and future liquidity, balance sheet, and cash flow problems. There is an anticipated decline in the profitability of the businesses during this uncertain period and attention has been turned to the directors’ ‘duties and liabilities’ to creditors when the company is on the verge of insolvency. Directors have to strike a balance among the shareholders, creditors, and workers in the corporate restructuring process. In engaging with these stakeholders during the transformation process, the directors play a key role. It is about quick choices and decisions to be taken to save a business on the verge of insolvency, and it is therefore vital that directors act at the first sign of financial distress. There is a general duty for directors not to trade when insolvent or close to the point of insolvency. Directors also have a contractual obligation to avoid insolvent trading. This article discusses the duties of directors under the Companies Act 2016 (CA 2016) to avoid insolvent trading. It further discusses by analysing based on the comparative study with other selected jurisdictions. This article proposes that while it is important to protect creditors’ interest by making the directors personally liable for insolvent trading, for the best interest of all stakeholders, there should be a balance between the security of creditors and the rescue of the company.

Grupo SMU: su compleja reestructuración corporativa

El presente caso relata el proceso de reestructuración corporativa del Grupo SMU, ligado a la industria chilena de supermercados minoristas, detonado por una situación interna provocada por ineficiencias operativas posteriores a un agresivo proceso de adquisiciones ocurrido entre los años 2007 y 2012. Esta problemática la experimentó el Grupo SMU, quien a través de una política de “Buy and Build” se convirtió en el tercer actor de la industria de supermercados en Chile a finales del año 2012. Si bien esta estrategia le permitió afianzar la posición competitiva del conglomerado, causó un crecimiento inorgánico que ocultó las diferencias en el desempeño operacional de las diferentes cadenas y no permitió el aprovechamiento de sinergias propias en el proceso de consolidación de un holding. Por ello, a mediados del año 2013, la falta de definición en la estrategia competitiva de SMU tuvo como consecuencia un fuerte debilitamiento en su posición financiera debido al significativo endeudamiento que se utilizaba para financiar las adquisiciones, así como por la insuficiente generación de flujos de caja. 
 Por otro lado, comparado con los dos principales actores de la industria, SMU mostraba menores niveles de rentabilidad y de ventas por metro cuadrado. Así, para hacer frente a la crisis, SMU implementó un plan estratégico trianual (2014-2016) sobre el fortalecimiento de tres pilares fundamentales: financiero, operacional y comercial, cuya meta era devolver la viabilidad financiera al conglomerado a finales del año 2016. Tras la implementación de dicho plan, SMU logró una mejora a nivel operacional y comercial. Sin embargo, en los primeros meses de 2017 las Clasificadoras de Riesgo aún tenían dudas sobre el desempeño futuro de SMU y su capacidad de gestión de la crisis. Por ello, Álvaro Saieh, quien se desempeñaba en ese momento como presidente del Directorio de la empresa, tenía diversas interrogantes relacionadas principalmente a si: ¿Fue exitoso el plan de reestructuración operacional y estratégico que llevó a cabo SMU en los últimos tres años? ¿Cuáles serían las variables críticas para asegurar la sostenibilidad de la compañía y su crecimiento en los próximos años? ¿Volveré a ser cuestionado como en 2013? Finalmente, ¿qué posibilidades tengo para crear valor corporativo en el futuro?

ABB India Corporate Restructuring Process through Slump Sale

This case study discusses the corporate restructuring of ABB India Limited with Hitachi. The case delves into the details about the restructuring, restructuring motives and the benefits of the restructuring. Modalities of the deal with projected synergy gain has also been explored and explained via a typical slump sale process. We conclude the case using a brand versus burden analysis by summarizing post-deal market reaction.

The concept of the system approach of the enterprise restructuring process

The article presents methodical requirements for the restructuring programme in the context of strategic management and the shaping of strategic forms. The author described the corporate restructuring model as a basis for transformations designed to achieve a knowledge-based organisation. The author attempted to address the following question: How should the knowledge management model be perceived in modern companies? Furthermore, the importance of organisational forms in the corporate restructuring process was underlined. The restructuring process should be carried out on the basis of specific restructuring objectives resulting from the scope of changes.

PREVISÃO DA MATERIALIZAÇÃO DO RISCO DE INSOLVÊNCIA DO GRUPO OI

Este artigo discute se as informações contábeis divulgadas pelo Grupo OI subsidiavam a previsão da materialização do risco de insolvência (pedido de recuperação judicial). Fundamentado no modelo de previsão de insolvência de Brito e Assaf Neto (2008) e da análise dos Balanços Patrimoniais, Demonstrações do Resultado e do Fluxo de Caixa, Relatórios de Sustentabilidade e da Administração e Notas Explicativas divulgados entre 2009 e 2015, constatou-se que os seguidos processos de reestruturação societária geraram operações descontinuadas; aumento de despesas financeiras e endividamento; queda nas Unidades Geradoras de Receita e baixa na geração de recursos, conduzindo a empresa a insolvência.

Collective action and labour militancy interrupted: Back-to-work legislation and the state of permanent exceptionalism at Air Canada

Using data collected from survey responses and interviews conducted in 2014, this study examines the consequences of back-to-work legislation from the perspective of customer service workers at Air Canada represented by Unifor Local 2002. By examining union attitudes, opinions of strikes, wildcat actions and back-to-work legislation deployed in 2011 and 2012, the study concludes that this type of legislation functioned to protect the interests of the employer in an ongoing process of corporate restructuring. Such ad hoc legislative measures, defined by political economists as ‘permanent exceptionalism’, further undermines the industrial pluralist regime that is the foundation of Canadian labour relations.

건설산업의 특성을 고려한 워크아웃기업의 가치평가 : Black·Scholes 모형을 중심으로

The Korean construction industry has played a major role among all industries despite its relative small ratio of all. The global economic crisis, however, has adversely affected the construction industry. Therefore, the Korean government implemented a corporate restructuring process to ensure the stability of the financial market. The selection standard on workout enterprises by the government is based on two perspectives: (1) external factors, including macroeconomic indices and (2) internal factors, including financial statements of private enterprises. On the other hand, if considering the characteristics of the construction industry, a certain construction company may not be evaluated only by its financial statements. In other words, a valuation process that utilizes the financial statements only can be concluded to be irrational. Accordingly, this study aims to provide the valuation model, which embraces the characteristics of workout firms, and determines their implications. To accomplish this, each enterprise valuation was measured using DCF and Black·Scholes models, and by comparing such results with their market value, each enterprise was determined to be either under or over-valued. The results of this study verified that the valuations of 2 workout companies (out of 4) showed a higher value than the market value.

Historical and Contextual Contingencies of Learning from Success and Failure

Scholars have begun to identify and understand some surprising and subtle contingencies of organizational learning from success and failure. The symposium gathers scholars involved in research on this topic and provides us with an opportunity to take stock of both what we have learned and new, emerging issues. The research conducted by the scholars in this session have each identified new historical or contextual factors that influence organizational learning across a wide range of industries and organizations. Many of these findings complement each other, while others appear to contradict each other. Gathering in a symposium format enables us to learn about these findings and also to begin a conversation that will help us to understand how these various findings can be reconciled and understood. An Information Theoretic Approach to Learning from Corporate Restructuring Processes Presenter: Katrin Susanne Muehlfeld; U. of Trier Presenter: Padma Rao Sahib; U. of Groningen Presenter: Harmen de Weerd; Gronin...

As centrais sindicais e o fenômeno do transformismo no governo Lula

O presente trabalho tem como objetivo analisar as cinco principais centrais sindicais brasileiras, no contexto do fenômeno do transformismo e das políticas de reestruturação produtiva e de precarização do trabalho levadas a cabo no governo Lula. Além disso, pretende-se analisar as propostas de ação sindical defendidas pelas centrais no sentido de fazer frente ao quadro de mudanças em curso, mudanças essas que têm incidido diretamente tanto no plano da materialidade como na subjetividade das classes trabalhadoras. Assim, algumas indagações nos parecem pertinentes: o que tem levado as centrais sindicais a optarem por uma política de parceria e aproximação com o governo, em detrimento de uma linha mais conflitiva? O fenômeno da aproximação das centrais sindicais seria responsável pela acomodação política diante da ofensiva das empresas no tocante à reestruturação produtiva, à flexibilização e à precarização do trabalho? Dito de outra maneira, as centrais sindicais não estariam operantes frente à ofensividade do capital sobre o trabalho?

Corporate Defaults, Workouts and the Rise of the Distressed Asset Investment Industry

This paper examines corporate distress episodes for the United States, Western Europe, and Asia during the late twentieth century, and charts the emergence and growth of new actors in the corporate restructuring process – distressed asset investment firms. We analyse the formation and growth of these firms; including their investment focus, geographic and product expansion strategies. We find that the distressed asset investment industry is dominated by firms based in the United States, is relatively concentrated in terms of number of firms and assets under management, due in large part to early movers developing distinctive investment capabilities through participation in landmark transactions, relationship-specific resources, and scale effects. We examine empirically how the rise of distressed asset investment firms has altered the pricing dynamics in the corporate distressed market. We model the demand and supply of distressed debt over a thirty year period using historical data on loan issuances, corporate defaults and recovery rates. We find that the demand for distressed asset investment has become more responsive to supply over time with falling supply-demand ratios, implying lower investment returns. We conjecture that the emergence and growth of distressed asset investment firms has resulted in private sector workouts becoming more competitive and more efficient, especially in the United States.

Restructuring in privatised firms: A Statis approach

We analyse the dynamics and evolution of the corporate restructuring process in the Portuguese banking sector, where 10 banks were privatised during the period 1989–1996. We apply a novel methodological approach in this context, using a multidimensional measure of restructuring that links product and labour market variables. We find evidence of considerable heterogeneity in the restructuring process, where firms adjust at different speeds and intensities. We also find that the wage level is by far the firm attribute that changed more, which is shown to reflect substantial changes in terms of composition, and not size, of the workforce. Our empirical evidence also suggests that privatisation is associated with a higher level of rent sharing.

Leveraged Buyouts of Private Companies

Over the last two decades, the number (enterprise value) of leveraged buyout transactions involving privately held targets totals more than 10,000 (over $850 billion), accounting for 46% (21%) of the worldwide leveraged buyout market. Yet the vast majority of academic studies focus on the buyouts of publicly held targets. This paper investigates the effects of leveraged buyouts on privately held targets. I find that, unlike the corporate restructuring process of public firms after the buyouts, private targets sponsored by private equity firms grow substantially after the buyouts. The overall evidence suggests that private equity firms, through leveraged buyouts, facilitate private targets’ growth by alleviating targets’ investment constraints.

The role of leadership in international retail divestment

PurposeThe purpose of this paper is to explore the role played by leadership in divestment decision making and indeed during the corporate restructuring phase for retail organisations. In doing so, the paper aims to contribute to a growing body of research that seeks to develop understanding of the factors leading to retail divestment and the nature of corporate response to divestment.Design/methodology/approachA multiple case approach is utilised. The cases are selected from a database of international retail divestment activity over a longitudinal period.FindingsThe paper demonstrates that divestment can be a response to “failure”, however, support is also provided for the assertion that divestment can be a strategic decision to devote resources more efficiently elsewhere, either at home or abroad. A key finding is the role of leadership and managerial stability in relation to divestment and restructuring at home and abroad.Research limitations/implicationsThe themes presented in this paper are developed from observational data. The validity of the themes should be examined further through in‐depth, qualitative case studies of divestment activity. Future research could examine the role of new CEOs both in relation to the divestment itself and during the process of restructuring following divestment.Practical implicationsThe role of leadership and managerial stability in divestment and corporate restructuring processes are highlighted. Insights are provided into the organisational response to divestment actions and the implications for further international strategies.Originality/valueAcademic debate on divestment has highlighted a wide range of reasons that lead to retailers divesting international operations and the strategic value of divestment. This paper adds to existing knowledge by examining the role of leadership within the divestment process.

La négociation collective des restructurations en France : de la consultation des représentants du personnel à la négociation des accords de méthode

In France, economic redundancy and corporate restructuring processes are governed by a law that has expanded employers' obligations as much with regard to employees as to labor representatives (reclassification, redundancy program, content of economic and social information). In the past few years, the law has tended to favor collective negotiations in companies. The "accords de methode" (method agreements on how to achieve restructurings) are symptomatic of this change. They could take part in a reconfiguration of corporate actors and open a new space for collective action and negotiation. The article examines the implications. [PUB ABSTRACT]

Characteristics of Merging Firms in India: An Empirical Examination

The process of corporate restructuring through mergers and acquisitions has occupied much relevance in post-liberalization period. The financial characteristics of a firm play a critical role in the merger decision process. This study analyses the distinctive financial characteristics of the acquirer and the target firms in the period of merger. In addition, the empirical challenge is to determine the measurable factors that make a firm attractive as a takeover target. The fundamental research focus is on the characteristics that make a firm an acquirer and on identifying those characteristics of a firm, which will have a significant impact on the probability that firms will be acquired. The ratios involved in the study were reflective of the financial and product market characteristics. The sample firms consisting of 227 acquirer and 215 target firms represented the mergers during the period 1993—2004. The distinctive characteristics of the acquirer and the target firms were analysed with Mann Whitney U test and Kolgomorov Smirnov test on the assumption of non-normality of the sample distribution. The final step involved using the logit regression to examine the likelihood that a given firm will be the target of an acquisition attempt. The same sample of target firms merged between 1993-2004 period and a random sample of 490 non-acquired firms based on a matched industry sector and similar size (sales) are obtained for the logit model estimation. The comparative study of the acquirer and the target firms in the year of merger and the logit analysis reveals the following: The size of the target firms was much smaller compared to the acquirer firms. The acquirer firms have higher cash flow, higher PE ratios, higher book value, higher liquid assets, and lower debt to total assets ratio, which are statistically significant when compared to the target firms. Some evidence points out higher leverage for the target firms especially for measures of market leverage. The lesser the liquidity position, greater the probability of a firm becoming a target. The larger firms are less likely to become acquisition targets. Logit coefficients are consistent with the size hypothesis and inefficient management hypothesis. The advertising intensity ratio and the cash flow to market value of assets show statistical significance based on logit results. The results of the study indicate that firms generating free cash flows and having low debt levels have a tendency to incur agency costs. Capital structure characteristics provide the acquirers and the target firms a motive for mergers. The acquirer firms with unused debt capacity can use mergers as a strategic business tool for gaining financial synergy.

The Role of Distressed Investing and Hedge Funds in Turnarounds and Buyouts and How This Affects Middle-Market Companies

In the latest evolutionary step in distressed investing, credit- oriented hedge funds have become much more proactive in the corporate restructuring process. Following the emergence of these institutional lenders in the leveraged finance world, the need to improve spread has caused many of these funds to focus on transactions in the middle market. This trend has brought more capital structure options and greater liquidity to middle-market private equity funds and companies, but at a price, as these investors are most interested in directing turnaround plays. <b>TOPICS:</b>Private equity, portfolio construction, CLOs, CDOs, and other structured credit

Security Analysts and Market Reaction: Caveat for Monitoring

Security analysts, analyst forecast and market reaction are anecdotal in restructuring transactions, sometime conflicting and some other time imperative to the process of transaction. This article attempts to highlight a consistent association between analyst, market reaction and corporate restructuring. A close intermediation between those themes is analysed in this article, implying the relationship is contiguous. However issues of delayed price adjustment, conglomerate stock break-ups and negative earnings surprises are not discussed in this paper, though such factors are ingeniously important and crucial to the process of corporate restructuring.