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The impact of top management team characteristics on a firm’s default risk: Evidence from the United Kingdom SMEs

Dewandono, A.W. (2018) The impact of top management team characteristics on a firm’s default risk: Evidence from the United Kingdom SMEs.

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Abstract:Top management team (TMT) as the coalition of powerful actors in an organization with their own particular characteristics has a great influence in any decision-making processes and may affects the organizational outcomes accordingly. A number of researches has indicated that TMT characteristics do have influences on a firm’s strategic outcomes and its performance. Yet, none of the literature – in the making of this study – explored the influence of TMT characteristics on a firm’s default risk. Against the backdrop, this study investigates the impact of TMT characteristics on a firm’s default risk, specifically the age, tenure, and size of the TMT and the presence of female top managers in the team, of small and medium-sized enterprises (SMEs). By treating the TMT characteristics as predictors and the existing financial-based default risk measure as the dependent variable, this study shows promising results. Based on the sample consisting of 7151 observations of SMEs across United Kingdom from the year 2013-2016, the results show that the average age and tenure of a TMT and the presence of female top managers in the team have a negative impact on a firm’s default risk. This study contributes in two ways. For the literature, this study acts as the preliminary attempt to explore the impact of TMT characteristics on a firm’s default risk. As for more practical application, this study gives an insight and helps the practitioners in assessing firm’s default risk by taking into account the TMT characteristics in the process.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/75682
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