Financial Distress Costs, Incentive Realignment, Private Equity and the Decision to Go Private: Public to Private Activity in the UK

2004 ◽  
Author(s):  
Charlie Weir ◽  
David Laing ◽  
Mike Wright ◽  
Andrew Burrows
Keyword(s):  
Financial Distress ◽  
Private Equity ◽  
Private Activity ◽  
The Uk

scholarly journals Is corporate governance of private equity targets more effective for risk mitigation?

2021 ◽  
Author(s):  
Vladimiro Marini ◽  
Massimo Caratelli ◽  
Gian Paolo Stella ◽  
Ilaria Barbaraci
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Financial Distress ◽  
Private Equity ◽  
Risk Mitigation ◽  
Governance Mechanisms ◽  
Active Monitoring ◽  
Industry Expert ◽  
Corporate Governance Mechanisms

AbstractPrivate equity is a source of finance and a governance device characterised by active monitoring through sponsors that intervene in targets’ corporate governance. As sponsors are skilled and motivated acquirors, we investigated whether corporate governance mechanisms mitigate leveraged targets’ risk of financial distress differently compared to non-acquired companies through the lenses of agency theory and resource-based theories. We found that targets and non-acquired companies are not significantly different in terms of corporate governance features, but sponsors are skilled enough to choose corporate governance members to mitigate risk more, especially when boards are smaller, have busier industry expert directors, and mandate execution to more managers. These results can be useful to targets, targets’ investors and lenders, and policymakers.

MOTIVES FOR CORPORATE HEDGING: EVIDENCE FROM THE UK

2005 ◽  
Vol 01 (01) ◽  
pp. 0550003 ◽  
Author(s):  
EPHRAIM CLARK ◽  
AMRIT JUDGE
Keyword(s):  
Risk Management ◽  
Financial Distress ◽  
Economies Of Scale ◽  
Foreign Currency ◽  
Annual Reports ◽  
Data Sets ◽  
Growth Options ◽  
Corporate Hedging ◽  
Currency Exposure ◽  
The Uk

In this paper, we use survey data and data from annual reports to identify the determinants of hedging activity of United Kingdom (UK) firms in the context of an overall program of risk management. Comparing the two sets of data makes it possible to identify misclassified firms, that is, firms whose hedging claims are not consistent across the two data sets. Our results on the consistent data show that the likelihood of hedging is related to growth options, foreign currency exposure, liquidity and economies of scale in hedging costs. Contrary to many previous US studies, we also find strong evidence linking the decision to hedge and the expected costs of financial distress. Results for the misclassified firms suggest that they are actually hedgers that hedge less extensively than the correctly classified (CC) hedgers.

scholarly journals For-Profit Hospitals Out of Business? Financial Sustainability During the COVID-19 Epidemic Emergency Response

2020 ◽  
Author(s):  
Florien Margareth Kruse ◽  
Patrick P.T. Jeurissen
Keyword(s):  
Emergency Response ◽  
Financial Distress ◽  
Private Equity ◽  
Elective Surgery ◽  
Financial Sustainability ◽  
Policy Makers ◽  
For Profit ◽  
Portfolio Size ◽  
Organisational Factors ◽  
The Impact

This perspective argues that for-profit hospitals will be heavily affected by epidemic crises, including the current coronavirus disease 2019 (COVID-19) outbreak. Policy-makers should be aware that for-profit hospitals in particular are likely to face financial distress. The suspension of all non-urgent elective surgery and the relegation of market-based mechanisms that determines the allocation and compensation of care puts the financial state of these hospitals at serious risk. We identify three organisational factors that determine which hospitals might be most affected (ie, care-portfolio, size and whether it is private equity [PE]-owned). In addition, we analyse contextual factors that could explain the impact of financial distress among for-profit hospitals on the wider healthcare system.

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