Examining the Relation of Financial Crisis, Life Cycle, and Asset and Financial Restructuring Strategies of Companies with Financial Crisis

Document Type : Research Paper

Authors

1 PhD Student, Department of Public Administration (Finance), Bojnourd Branch, Islamic Azad University, Bojnourd, Iran

2 Associate Professor, Department of Management and Accounting, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran

Abstract

Restructuring is a concept of profound changes that have an extensive impact on the future activities of the company. In this regard, investigating the effect of enforcement of these strategies is crucial. The purpose of this study is to investigate the impact of the implementation of restructuring strategies in different stages of the life-cycle of companies that are stuck in crises. For this purpose, we used Z-score Toffler to select crisis companies. Our sample consists of 406 years – Companies between 2005-2015. Dickinson's cash flow model (2011) was used to determine the stages of the company's life cycle and the Logit regression model was used to test the hypotheses. The results suggest that Toobin's variable is only significant and negatively correlated with the asset restructuring strategy. The total assets variable correlated negatively with the restructuring of management structures, and positively with the asset restructuring strategy. We found no relationship between the financial leverage variables, the cash flows of the institutional shareholders, the firm's assets, and two structure renewal strategies. The results indicate that growth-stage companies are less likely to use the asset restructuring plan than firms in the birth, maturity, shake-out, and decline stage. Similarly, in the birth stage Companies, the use of management restructuring is less likely than firms in growth, maturity, and shake-out stages.

Keywords

References

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Financial Management Strategy
Volume 9, Issue 4 - Serial Number 35
December 2021
Pages 175-190

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History

  • Receive Date: 14 March 2019
  • Revise Date: 01 July 2020
  • Accept Date: 11 July 2020

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