Manager Characteristics and SMEs' Restructuring Decisions: In-Court vs. Out-of-Court Restructuring

This study aims to empirically investigate the impact of managers' characteristics on their choice between in-court and out-of-court restructuring. Based on the theory of upper echelons, we tested the preferences of 342 managers of financially distressed French firms regarding restructuring decisions. The overall findings of this study provide empirical support for the upper echelons theory. Specifically, managers with a long tenure and those with a high level of education are less likely to restructure before the court and are more likely to restructure privately. The findings also indicate that managers' age and gender do not significantly affect their choice between in-court and out-of-court restructuring. This study contributes to the literature on bankruptcy and corporate restructuring by turning the focus from firm characteristics to manager characteristics to explain restructuring decisions.